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STC Returns to Talks on Vodafone Egypt Stake Acquisition

STC Returns to Talks on Vodafone Egypt Stake Acquisition

Wednesday, 9 September, 2020 - 04:15
STC resumes negotiations over the purchase of stake in Vodafone Egypt, Asharq Al-Awsat

The Saudi Telecom Company (STC), the Middle East’s largest telecom company, is in discussions to reduce its non-binding USD2.39 billion offer for a majority stake in Vodafone Egypt, Bloomberg reported, citing sources with knowledge of the matter.

In January 2020, STC signed a non-binding MoU with UK-based Vodafone Group to acquire its 55% stake in Vodafone Egypt.

The MoU was extended for a 90-day period in April 2020, due to delays linked to the coronavirus pandemic, while a further 60-day extension was confirmed in July.

STC has been told by the Egypt’s Financial Regulatory Authority that it must also offer to buy the entirety of the Vodafone Egypt stake, including the shares owned by Telecom Egypt, under the provisions of a 1992 law mandating a tender for any outstanding shares.

According to Bloomberg, the two companies will work during this period to proceed with transaction procedures, as specified in the memorandum of understanding, and they will later announce any substantial developments in this regard.

STC, in a statement published at Tadawul, said that in light of the logistics challenges caused by the novel coronavirus and the time needed to complete the procedures of the deal, Vodafone and STC had agreed to extend the MoU for another 60 days, starting today.

The statement also said that, in the event of completing this deal, the two parties intend to conclude a market partnership agreement that permits the use of the Vodafone brand, and other Vodafone services.

Nevertheless, any binding deal will be subject to obtaining the necessary approvals from the boards of directors at STC and Vodafone, in addition to obtaining the approvals of the relevant regulatory authorities.

The cash offer is for Vodafone’s 55% stake in Vodafone Egypt, the remaining part of which is held by state-owned Telecom Egypt. STC had said that the offer gives the Egyptian business an enterprise value of $4.35bn.

The final price of the acquisition will be set when the binding offer is signed.

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