UAE’s Etisalat has failed to make the final payment for the takeover bid of PTCL. The deadline had been extended 2 months from August to October. Etisalat’s bid was $1.96 per share while it’s nearest competitor China Mobile bid $1.066 per share–almost half. Surely Etisalat management must have felt like a bunch of idiots and their knee-jerk response was to demand various concessions (deferred payments, tax exemptions, permission to trade stock in the UAE market) to make up for their grave miscalculation. What action should be taken next?
playing hard ballIt’s not all as bad as it seems:
http://www.dailytimes.com.pk/default.asp?page=2005%5C11%5C03%5Cstory_3-11-2005_pg7_2:
ISLAMABAD: The agreement for the sale of the Pakistan Telecommunication Company Limited (PTCL) between the Privitisation Commission and Etisalat will be renegotiated in a meeting scheduled for November 5-6 in Dubai….
The official said that the Etisalat management expressed great interest in acquiring control of the PTCL in a meeting with the privitisation minister last Sunday in Dubai. “The financing of the $2.598 billion from the consortium of UAE banks and the transfer of these funds to Pakistan within a reasonable time frame will be our target for the meeting. The time frame for payment in installments will also be discussed in the meeting, if demanded by Etisalat,†the official said.
Etisalat is playing hard ball with the folks over at PTCL. They know that PTCL/Pakistan will do almost anything to get the permium $1.96 share price, given that the other 2 bids were almost half of what Etisalat offered. Clearly Etisalat has alot to gain from this deal as - they need to start expanding to other markets now that the UAE government has started to take steps to de-monopolize UAE’s telecom.
I think the deal will go through eventually - it’ll be interesting to see how far they manage to twist PTCL’s arm while doing so.
RE: playing hard ballHere’s another article that agrees with the poster’s original analysis - Etisalat is finally realizing what they have stepped into:
etisalat’s ceo resignsIs this fallout from the PTCL deal?
http://www.itp.net/news/details.php?id=18708&category=
Another interesting thing to note from the article is that Etisalat bid $6.5 billion for Turk Telecom in July 2005 - they were outbid by the Saudis by 0.05 billion dollars.
RE: etisalat’s ceo resignsAtleast the board of directors still have their head on straight. This CEO really screwed up.
Atleast, PTCL still got has 25% down payment which should not go back to Etisalat. The dilemma Etisalat has on their hands is whether to pay the 90% or so premium over the second highest bidder, or watch their 25% evaporate. Now even if PTCL defaults to China’s bid, they still get to keep the 25% down payment although the negative press surely couldn’t have helped much and this time around this bids will likely be much lower.
Seems like, theirSeems like, their acquisition talks have started again but Etisalat wants the price tag slashed.
RE: Seems like, theirThe stock price of PTCL suggested this news was already looming in the market.
PTCL should keep the downpayment and find a new bidder.
The problem is not just that Etisalat wants to acquire PTCL by matching a losing bid but it’s also the way they have handled this situation altogether (which doesn’t say much about the company). They’re just going to pose more problems down the line.
Etisalat and PTCL aint over yetAs far as i know the deal isnt over yet…There is a negatation going on from both sides …I hope Etisalat takes over PTCL asap…