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UAE’s Etisalat pays $4.4 billion for 10 per cent of Vodafone

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Bloomberg | May 14 | Updated on: May 14, 2022

Purchase makes Etisalat Vodafone’s largest shareholder, ahead of BlackRock Inc., the Vanguard Group Inc., and HSBC Holdings Plc

UAE phone company Etisalat Group said it has bought a 9.8 per cent stake in Vodafone Group Plc for $4.4 billion as the West Asian telecommunications provider seeks to expand globally.

Etisalat Group offered about 130 pence ($1.59 dollars) a share, according to Bloomberg calculations. That’s a premium of about 10 per cent to Vodafone’s 117.82 pence closing price on Friday. The purchase makes Etisalat Vodafone’s largest shareholder, ahead of BlackRock Inc., the Vanguard Group Inc., and HSBC Holdings Plc, according to Bloomberg data. 

The government-controlled company plans to remain a long-term investor and won’t make an offer for the rest of Vodafone shares, Emirates Telecommunications Group Company PJSC, or e&, as the Abu Dhabi-listed group is formally known, said in a stock exchange statement. 

Etisalat Group “made the investment in Vodafone to gain significant exposure to a world leader in connectivity and digital services” and aims to develop opportunities for commercial partnerships, it said.

The purchase comes as Vodafone faces pressure from activist investor Cevian Capital AB, which has called on the telecoms giant to simplify its business and pursue deals to improve returns. The company is in talks to combine its UK operations with rival operator Three UK, owned by CK Hutchison, the Financial Times reported earlier this month. 

The United Arab Emirates has developed as a business and tourism hub of West Asia. The Persian Gulf state has parlayed its oil wealth into developing technology and logistics industries and seeking to attract investment for advanced manufacturing.

Like larger neighbour and business rival Saudi Arabia, the UAE is looking to prepare its economy for a post oil era and create jobs for its citizens. The countries, both members of the Organization of Petroleum Exporting Countries, are investing their wealth into growth industries abroad. Saudi Arabia has ploughed funds into Masayoshi Son’s Softbank Vision Fund and into electric carmakers, while Abu Dhabi last year listed its semiconductor maker Globalfoundries Inc.

“Our investment represents a unique opportunity to acquire a significant stake in one of the leading and strongest global telecom brands,” Etisalat Chief Executive Officer Hatem Dowidar, said in the statement.

©2022 Bloomberg L.P.

Published on May 14, 2022

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