The UAE based Etisalat may settle for a significant minority stake in Kuwait’s Zain after opposition from some shareholders to a takeover threaten to delay the sale. The UAE operator was in talks to buy a 46% stake in Zain, from a consortium lead by the Kharafi Group conglomerate. However, citing two unamed sources close to the deal, Reuters said that stake had now been cut to 40%.

The delay comes from action by the Al Fawares Holding, which owns a 4.5% stake in Zain, who has launched legal action to halt the due diligence in the planned sale. A ruling on their action is not due until 22nd December.

Although the initial deal may be for just 40% of the company, Etisalat could still build up it stake over time to secure majority control.

In a statement Etisalat Chairman Mohammed Omran said he would not confirm the lower stake target. “Please note that we do not comment on market rumours and we have not yet issued any official statement on this regard yet,” he said.

Etisalat has offered US$12 billion to buy 46% of Zain shares. As some 10 percent of Zain shares are held as treasury stock, the 46% holding would give Etisalat effective control of the company.

The Kharafi Group – who are driving the sale – directly owns 12.7% of Zain, but its subsidiaries take its holdings up to around 20 percent. The Kuwait Investment Authority, the country’s sovereign wealth fund, is Zain’s largest shareholder with 24.6 percent of the company.

On the web: Reuters