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Tuesday, 14 April 2020

STC extends MoU for Vodafone takeover by 3 months on covid-related delays

M&A WATCH- STC extends Vodafone Egypt stake purchase agreement by three months on covid-related delays: Saudi Telecom (STC) has extended by 90 days its agreement with Vodafone Group for its planned acquisition of the group’s 55% stake in Vodafone Egypt due to complications caused by the covid-19 pandemic, it said in a disclosure to the Saudi stock exchange. The company cited “logistical challenges” caused by the coronavirus and said that it required more time to complete due diligence. A preliminary agreement for the USD 2.4 bn sale signed in January was valid for 75 days but allowed for an extension provided both companies agreed.

Corona continues to interrupt what could be Egypt’s largest-ever M&A: This is the second setback to the agreement this month amid lingering economic uncertainty caused by the covid-19 pandemic. Sources told Bloomberg earlier this month that STC had postponed talks for a loan to finance the Vodafone takeover and that it may reopen negotiations for a USD 2 bn+ loan when the crisis eases or consider other financing options.

Background: STC signed a non-binding MoU with UK-based Vodafone Group to buy its stake in Vodafone Egypt for USD 2.4 bn in January. Telecom Egypt, which owns the remaining 45%, has a right of first refusal on the transaction and will reportedly decide this month how it plans to proceed. The Financial Regulatory Authority said after the initial acquisition agreement that the Saudi company may be required to make a mandatory tender offer for 100% of the company if it goes ahead with the Vodafone Group buyout.

Advisers: Barclays is working with STC on the transaction, Goldman Sachs is advising Vodafone and EFG Hermes and Citibank are advising Telecom Egypt.

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