Wednesday 23 March 2011

Prince Waleed Finally Wins In Telco, Buys Zain Saudi For $950M

Last week, Prince Waleed, whom Forbes labeled the “Prince of deals”, lived up to his name and made an apparently successful $950M bid (in partnership with Bahraini Batelco) for Zain’s Saudi mobile business. It was the culmination of an over six year effort to break into the Saudi telecommunications business.
The joint bid, which has been preliminarily accepted by the Zain Board, will secure 25% of Zain Saudi which is one of the three Saudi mobile service companies. His purchase of these Saudi assets will enable Kuwaiti Zain to now be purchased by UAE Etisalat (which holds the 2nd Saudi mobile license).

For those not used to emerging markets’ value investing, this is a deal straight from the “Waleed playbook” and is worth studying. We have seen him do this same deal many, many times. Mainly because it really works.

A bit of background. This was Waleed’s third attempt at acquiring a Saudi Arabian mobile business. He bid in the auctions for both the 2nd and 3rd Saudi mobile licenses in 2004 and 2007 respectively. And not only did he not win either auction, he was among lowest bids in both cases. For the third license, his bid was less than half of MTC’s (Zain’s) winning bid of $6.1b.

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