Bharti Airtel acquires African operations of Zain

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On 30 March Bharti Airtel indirectly acquired 100% of Zain Africa, and through it the entire African operations of the Kuwaitbased Mobile Telecommunications Company KSC (Zain), except those in Sudan and Morocco.

This acquisition is the second largest ever by an Indian company after the US$12 billion takeover of Corus by Tata Steel in 2007. It was structured as a security (share) sale for US$10.7 billion. Bharti Airtel is paying Zain US$8.3 billion within three months from the date of closing and US$700 million after one year from the date of closing. In addition, as part of the acquisition Bharti Airtel has taken on about US$1.7 billion worth of Zain’s debts.

Arab_with_mobile_phoneBharti Airtel adopted the leveraged buy-out model for the acquisition. The loan for financing the transaction has been availed by the two special purpose companies (SPCs) created in the Netherlands and Singapore. A loan worth US$7.5 billion was taken from a consortium of banks led by Standard Chartered Bank and Barclays Bank. Additionally, Bharti Airtel had arranged for a rupee loan of the equivalent of US$1 billion from the SBI Group.

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The legislative and regulatory update is compiled by Nishith Desai Associates, a Mumbai-based law firm. The authors can be contacted at nishith@nishithdesai.com. Readers should not act on the basis of this information without seeking professional legal advice.

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