[economic times] Shares of Bharti Airtel plunged nearly 10 per cent Monday as brokerages gave a thumbs down to the company’s deal with Kuwaiti telecom
Zain for its African cellular assets. Brokerages were concerned that the company’s $10.7 billion offer could strain its finances.
Bank of America-Merrill Lynch cut Bharti Airtel to ‘underperform’ from ‘buy’ after the mobile operator began its exclusive talks with Zain. The investment bank said the valuation seems rich, the growth outlook for Zain's African portfolio appears unexciting and a potential deal could materially stress Bharti's balance sheet.
Bharti announced Monday an offer to buy the African assets of Kuwait's Zain telecom for $10.7 billion. Bharti Airtel and Zain Africa "have agreed to enter into exclusive
discussions until 25 March, 2010 for the acquisition of Zain's African unit based on an enterprise value of $10.7 billion," Bharti said in a statement.
Zain deal to strain Bharti's finances; stock down 10%