The Gulf's largest telecoms firm said on Wednesday it had accumulated data required for due diligence on Zain and will analyze it and seek to discuss the results with the seller. It is bidding to buy a 46 percent stake from Kuwaiti conglomerate Kharafi Group.
"(Etisalat's) stand towards Zain acquisition is not changed and Etisalat is still interested in the Zain deal," a spokesman said in a statement.
On Tuesday, a Zain source said the Abu Dhabi-based firm's attempt to buy the stake had failed, hours after the deal's architect appeared to walk away.
National Investments Co. (NIC), the investment firm owned by Kharafi on Tuesday said its binding agreement to sell the stake to Etisalat was over after the Feb. 28 deadline passed unmet.
A hostile board and complicated deal structure are among the hurdles to the deal which Etisalat, facing stiff competition at home from rival du, badly wants to expand its footprint in the Middle East.
"There are opportunities in the region but it's not as big as the Zain transaction," said Irfan Ellam, Al-Mal Capital telecoms analyst.
"There is competition for decent telecom assets. They've (Etisalat) got a very strong balance sheet, they've got the ability to raise a lot of cash so they can afford to do acquisitions but the question is where and at what price."
The Zain deal would make Etisalat the regional heavyweight but it has been plagued by delays and disputes.
As part of the deal, Etisalat required Zain to sell its stake in Zain Saudi because it also operates in the Kingdom through its affiliate Mobily.
But Zain's board — seen as hostile to the Kharafi Group which irritated other shareholders by cutting them out of the stake sale and accruing all brokerage fees on the deal — has rejected all bids for the 25-percent stake in Zain Saudi.
A lawsuit attempting to block the deal failed but a key board member, linked to one of the dissident shareholders, has repeatedly opposed the sale of the Zain Saudi stake.
"The deal could be offered again in a year, but now no one will agree to it, particularly the shareholders," said a Zain source, speaking on condition of anonymity.
