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HomeFeatured BlogsEtisalat Gets $500 Million Abu Dhabi Grant for Maroc Telecom Stake Buy

Etisalat Gets $500 Million Abu Dhabi Grant for Maroc Telecom Stake Buy

It’s every chief executive’s dream: make a potentially game-changing acquisition and your biggest shareholder gives you a massive no-strings-attached grant to help seal the deal.

That’s the reality Etisalat enjoys after the Abu Dhabi government gave the telco a $500 million grant to complete the $5.65 billion purchase of Vivendi SA’s 53% stake in Maroc Telecom, according to a new bond prospectus.

“In connection with the acquisition, the group received an amount of $500 million as a grant from an entity owned by the Government of Abu Dhabi,” the bond prospectus says.

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The revelation comes after news last week that Etihad Airways, the Abu Dhabi flag carrier, received a $3 billion interest-free loan until 2027 from the government when it was first launched.

The two tidbits of information underscore the opacity of the relationship between Abu Dhabi and commercially-run entities in the emirate, and raises the question of whether having an oil-rich shareholder unfairly benefits those companies as they compete on a global platform.

The grant to Etisalat is all the more unusual as it’s a listed entity, with 40% in public hands and 60% owned by the Abu Dhabi government. Etisalat declined to comment.

The $500 million grant came alongside support from the Abu Dhabi Fund for Development, a national entity set up in 1971 to provide development aid and administer grants on behalf of the Abu Dhabi government. The fund acquired 8.7% of the entity set up to buy the stake in Maroc Telecom.

Etisalat also received further special treatment. The Moroccan authorities last week exempted the telco from making a mandatory offer for the remaining shares in Maroc Telecom – Morocco and Abu Dhabi have traditionally had very strong government relations.

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(via WSJ Blogs)

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