Standard & Poor's Ratings Services said today that its ratings and outlook on Emirates Telecommunications Corp. (Etisalat) (AA-/Stable/A-1+), the former incumbent fixed-line and leading mobile telecoms operator in the United Arab Emirates, are not immediately affected by Etisalat's announcement that its offer to buy a 51% stake in Mobile Telecommunications Company (Zain)--for about $12 billion at Kuwaiti dinar 1.70 per share--has become binding.
"We understand that the offer is subject to multiple conditions. Etisalat will have the option not to proceed with the deal if these conditions are not met or if it is unsatisfied with the results of due diligence. We understand that the binding offer is a requirement to start formal due diligence and that the parties have not yet negotiated any principal terms and conditions. We assume that Etisalat's recently announced plans to issue $7 billion in medium-term notes, which could significantly weaken its financial profile, will materialize only if the transaction happens," the rating agency said.
