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Tuesday, 8 September 2020

STC looks to reduce USD 2.4 bn offer for Vodafone Egypt

M&A WATCH- Is STC about to make a new, lower offer for Vodafone Egypt? Saudi Telecom (STC) is in talks with Vodafone to lower its non-binding USD 2.39 bn offer for a 55% stake in Vodafone Egypt, Bloomberg reports, citing unnamed sources familiar with the matter. It remains unclear how STC values the stake, but an offer will need to be placed on the table before the deadline for negotiations passes at the end of this week. The Saudi firm extended the MoU for an additional 60 days in mid-July due to “logistical challenges” resulting from the covid-19 pandemic. It extended the original agreement in April for the same reason.

Background: STC began due diligence in March after signing a non-binding MoU with Vodafone Group in January to purchase its stake in Vodafone Egypt in a sale that would value the company at USD 4.4 bn. Telecom Egypt, which owns the remaining 45% of Vodafone Egypt, maintains the right of first refusal on the transaction, but it’s still unclear how it plans to proceed should STC move ahead with the purchase. 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 transaction.

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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