IHS Global Insight Perspective | |
Significance | France Telecom has been given the opportunity to buy Orascom's stake in Mobinil below the current market price. |
Implications | Mobinil is seen as Orascom's primary telecoms investment in Egypt and does not want to give it away at such a low price. |
Outlook | With the court rulings and the Egyptian FSA in favour of the deal to go ahead, time is running out for Orascom; France Telecom about a week to close the deal. |
Orascom's 28.75% holding in Mobinil are about to be sold to France telecom for E£245 (US$45), the deal is on the table until the 14 January and France Telecom has no intention of raising its offer. A France Telecom spokesman was reported by Dow Jones stating: "The independent analysis doesn't put into question the validity of our offer…We have no intention to raise it." In December, the Egyptian regulator announced it accepted an offer from France Telecom for the remaining shares in Mobinil, where France Telecom's local unit Orange Participations paying E£245 (US$44.42) for each freely traded share of Egyptian Company for Mobile Services (ECMS), known in Egypt by the mobile brand name Mobinil.
The sale follows an arbitration ruling in April that stated Orascom Telecom must sell its stake in Egypt's biggest mobile operator Mobinil to France Telecom, setting a price of E£273 per share (see Egypt: 6 April 2009: Orascom Ordered to Sell Mobinil Shares to France Telecom). Under the ruling, France Telecom and Orascom Telecom submitted, the documents necessary to complete the transaction of the Mobinil shares held by Orascom Telecom to France Telecom. The documents were registered on 15 April 2009 with the Trading Committee of the Cairo and Alexandria stock exchange. the dispute in price occurred as, it was not immediately examined in the course of a formal offer by France Telecom to buyout the ECMS shares not held by Mobinil. Before the Egyptian regulator approved France Telecom's latest offer, France Telecom had made three separate bids of E£187, E£237, and E£230 per share all of which the regulator rejected. The regulator had previously said that the company should either buy the ECMS shares at the court price of EGP273 a share, or justify offering a lower price.
Outlook and Implications
With the offer of E£245 approved by Egypt's Financial Supervisory Authority Orascom was up until earlier this week still refusing to give in to the French operator over Mobinil and ECMS unless they raise their ECMS offer to E£273.26 a share. Although Orascom appealed against the price decided by the Egyptian Financial Services Authority, it was turned down earlier this week (see Egypt: 4 January 2010: Orascom Losses Appeal, France Telecom to Purchase Orascom’s 29% Stake in Mobinil).
According to France Telecom, its E£245 bid for the rest of ECMS represents a premium of 63.3% over the closing price April 5, just before the Mobinil arbitration ruling against Orascom was announced.