Etisalat/Zain deal to have been landmark for Gulf: RBS

UAE telco Etisalat's scrapped $12 billion offer for rival Zain would have been a landmark deal for the Gulf where sovereign wealth funds tend to hog the limelight on big deals, RBS executives said.

The Gulf region's largest telecom player walked away from the deal on Saturday citing Zain's divided board, extended due diligence and regional unrest.

"It's unfortunate that the deal has collapsed," said Tom Emmet, RBS' managing director and head of corporate finance and equity capital markets for the Middle East and Africa. "For Etisalat it would have been a very transforming deal.

"For the region, it would have been a real landmark transaction that would have helped put the regional markets back on the map away from the limelight of sovereign wealth funds which you continue to see much of the headline activity."

Sovereign wealth funds, such as the acquisitive Qatar Investment Authority and Abu Dhabi-based investment vehicles, have garnered most of the M&A attention in the Gulf region by snapping up stakes in high-profile companies like Porsche SE .

"It might not be the definite end of it," Emmet said of the abandoned deal. "It probably is for a very short time. I think companies like Etisalat will never say never. I think the seller is never going to say never."

Zain major shareholder, the Kharafi Group, was the architect of the Etisalat deal and is keen to sell its roughly 20 percent stake in the Kuwaiti telecoms operator.

"I think something will ultimately happen to Zain. Mainly because you have a co-shareholder who is motivated to monetize their investments," Emmet added, speaking at a media roundtable.