France Telecom has lost its year-long battle to take over Egypt’s largest mobile phone operator, Mobinil, after an Egyptian court ruled against the giant telco.
Cairo’s Administrative Court ruled that the French operator, which already owns a majority…
France Telecom has lost its year-long battle to take over Egypt’s largest mobile phone operator, Mobinil, after an Egyptian court ruled against the giant telco.
Cairo’s Administrative Court ruled that the French operator, which already owns a majority share in the vehicle that owns 51% of Mobinil, could not offer to buy out the owners of the remaining 49% of the company’s stock at E£245 a share.
The court’s ruling overturns the 10 December decision of Egypt’s capital markets regulator that France Telecom could buy out the minority shareholders at the price of E£245 and delist the company from the Egyptian Exchange.
Orascom Telecom, which is the other major shareholder in Mobinil, appealed the decision of the Egyptian Financial Services Authority on 2 January. Orascom owns 28.75% of Egyptian Company for Mobile Services (ECMS) – the holding company in which France Telecom has a majority stake – and an additional directly held 20% stake in the mobile phone operator.
In April 2009, Orascom Telecom lost a case that it had launched against France Telecom at the International Court of Arbitration. In a binding ruling, the court said that Orascom must sell its 28.75% stake in the holding company for E£273 a share.
Orascom immediately insisted that – under Egyptian law – France Telecom’s offer would only apply if the French telco extended the E£273 a share offer to the minority shareholders. As the company’s shares were trading far below E£273, France Telecom rejected Orascom’s claims setting the scene for a year-long legal battle which has only now been resolved.
Under Egyptian corporate law, France Telecom may bid for the remaining shares six months after its last offer; it could make another takeover attempt on 10 June.
The Egyptian regulator could restart the takeover battle by waiving the six-month rule – something which is within its power to do.
Mobinil shares closed unchanged at E£220, while Orascom Telecom’s shares rose 2% to E£7.24.
