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.
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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