France Telecom, Sawiris reach accord on Mobinil

France Telecom has reached a preliminary accord to buy out most of Egyptian tycoon Naguib Sawiris' stake in their jointly-owned telecom operator Mobinil, according to a statement on Monday.

The French group will then make a tender offer to the minority shareholders of the listed portion of Mobinil, known as ECMS, for LE202.5 ($33.75) per share, the same price offered to Sawiris.

If both Sawiris and minority shareholders accepted the offer, France Telecom would own 95 per cent of Egypt's largest mobile operator, with Sawiris holding onto merely 5 per cent.

The agreement is subject to approval by Egypt's stock market regulator.

France Telecom's offer represents a 61 per cent premium over the last ECMS price of 126.06 Egyptian pounds before the deal was announced.

Mobinil, which is Egypt's largest telecom company, was the subject of a drawn-out legal battle between Sawiris and France Telecom several years ago that ended in April 2010 with a new shareholders' agreement.

Under the terms of that agreement, Sawiris had a put option to sell his ECMS stake to France Telecom beginning in September 2012 for between 221.7 pounds and 248.5 pounds per share, depending on the timing.

The two sides were in talks over the put option in recent days because it ascribes a much higher value than Mobinil's current market valuation, which has shrivelled after Egypt's revolution paralysed much of the economy.

For France Telecom, the Egyptian operator is part of an ongoing effort to expand its footprint in high-growth emerging markets to offset tough competition in its home market.

Sawiris sold most of his telecom assets last year to Russia's Vimpelcom in a $6 billion deal, but his Mobinil stake was not included.

Mobinil is one of Egypt's three mobile services providers, and majority owned by France Telecom.

Orascom Telecom (OT) and France Telecom signed a partnership agreement on Mobinil in August 2001.

In 2007, after disagreements over Mobinil's budgetting, the two firms lodged a dispute with the International Court of Arbitration of the International Chamber of Commerce.

The court ordered OT to sell its stake in Mobinil to France Telecom in April 2009 at LE273 (currently, that equates to $46) per share.

At the close of 2011, OT was split into two companies following its partial takeover by Russian communications giant Vimpelcom. OTMT is the portion that holds the Mobinil stake.

For its part, the Egyptian Financial Supervisory Authority (EFSA) has suggested FT should submit a mandatory put option for 100 per cent of Mobinil, at the same price offered to OT.