Judge Hamdi Yassan said minority shareholders would be disadvantaged by the French firm’s offer at 245 Egyptian pounds per share, less than the amount an arbitration court said the French firm should pay for Orascom’s stake in their jointly-held holding company.
“The 28 pound difference in the price offer violates principles of equality in opportunity for shareholders. Selling at this price is not fair for minority shareholders,” he said.
The court made a snap decision in January to block regulatory approval of the fourth such bid from France Telecom, a day before it was to proceed.
“This decision is a big victory for Orascom and it will ensure that we continue to provide quality services to the Egyptian telecom market,” Orascom lawyer Osman Mowafi said.
A spokeswoman for France Telecom said the company did not wish to comment on the matter.
Almost exactly a year ago an arbitration ruling called on the French firm to buy out Orascom Telecom’s stake in their jointly held holding company for around 273 Egyptian pounds per share.
That sale was not completed as the firms disputed the implications for shares in the Egyptian Company for Mobile Services (ECMS), known by its Mobinil trade name. Orascom also owns a 20 percent direct stake in ECMS.
France Telecom said any offer would be voluntary, while Orascom said it was mandatory to offer the same price to all.
“The decision violated principles of transparency, disclosure, and equality of opportunity for shareholders,” the court decision said, referring to the regulator’s approval.
While citing the price discrepancy as one reason behind the decision, the presiding judge said the ruling’s focus was on the way the regulator granted the approval.
“The case in front of the court is not a decision on whether the price offer was just but rather whether the regulator’s decision was reached correctly,” Yassin told reporters after the ruling, adding that parties had 60 days to appeal.
Telecom analyst Delilah Heakel from investment bank Pharos said the status quo would likely continue in coming months, while the two firms may return to direct negotiations or France Telecom could make a new offer.
A lawyer from the Egyptian Financial Supervisory Authority told Reuters that it may still appeal the decision.
“After this court ruling we will study the decision and the designated authorities will decide if we will appeal it or not,” Ahmed Masrafi said.
In February, Orascom’s executive chairman told Reuters that the drawn out legal battle was damaging Mobinil commercially and was unlikely to be resolved quickly.
“We think now that we have to admit that the company is suffering because of this dispute, I can’t deny that anymore,” Naguib Sawiris said.