by Dr. Mo Ibrahim

African/British entrepreneur and philanthropist
Founder of Mo Ibrahim Foundation 
Founder / Former Chairman of Celtel International
In 2008, Dr. Ibrahim was listed by Time Magazine as one of the 100 most influential people in the world. 

As published in ‘A Passion for Adventure’ 

The story of how MTC (now Zain) acquired Celtel is really about Saad al Barrak, his character and his style.

In late 2004/early 2005, we were preparing for our Initial Public Offering. We had retained Goldman Sachs and Citibank to lead the process. Meanwhile, we started to receive unsolicited bids for the company from a number of operators and wealth funds. Our Board decided to initiate a parallel process to deal with the bidders. All bidders were allowed to carry out their due diligence and to access our data room before submitting their bids.

MTN of South Africa was the front-runner and was widely expected to close the deal. Celtel operations in Africa were a perfect fit for MTN’s footprint and consolidating the two companies would have created a prominent African operator with immense synergy and benefits for MTN. The deal was supposed to be finalised in early April 2005, before the approaching Easter holiday. Unfortunately, MTN management continued to negotiate what, in my view, were mute issues, raising highly improbable scenarios and attempting to safeguard any potential downside, however unlikely or trivial. No doubt they had the right to aim for a legally perfect document regardless of our views on this issue. However, as a result of this approach, we reached Good Friday without finalising or signing the agreement and the South African team decided to return home for the holiday. That at proved to be a big mistake.

During the Easter weekend I received a surprising and much-improved offer from Saad, who called to say he was willing to fly immediately with his team and legal advisers to sign an agreement with us in twenty-four hours. On Easter Monday, at Linklater’s office in London, I gathered my Board, my shareholders, management and advisers to meet with the MTC team and their advisers. It was a huge circus and the deal was signed that afternoon.

Saad’s decisiveness and ability to marshal his Board, his shareholders and his resources to clinch a deal over a weekend was almost unthinkable. What impressed me and my Board was his warm and trusting approach. There was no attempt at splitting hairs or counting every knife and fork in our kitchen. He had done his due diligence, he believed we were honourable people and that was that.
We signed a simple and clear agreement, without any ‘ifs’ or ‘buts’. His approach generated a lot of goodwill on our side which would shortly prove to be crucial in assisting MTC in executing a successful acquisition and integration process.

Saad al Barrak is a product of his environment, steeped in his country’s culture and tradition, a devout Muslim, a doting father, a poet and a fan of Arab music and folklore. Yet he is very much a Westerner, influenced by his years of study in the US and the UK. His interaction with the West was not limited to his academic work, as was the case for many others – he also tried to understand Western societies. The East/West blend has produced a self-confident man who embraces comfortably two different worlds; a liberal, questioning mind, wrapped around a core of traditional and conservative values.

Saad delivered value to his shareholders, but his radical approach to management, his brave bets and his unconventional style must have unsettled the Board at Zain. I always wondered how long he would survive there. How long could he keep swimming upstream? How long could the family business tradition sit alongside the institutional radical upheaval, and the ‘chaos by design’ management style that he embraced?

Saad’s personal relationship with Nasser al Kharafi , the principal shareholder at Zain and the head of one of Kuwait’s leading business families, was crucial for his survival. But when the family business interests diverged from the grand vision for growth, the split was inevitable.

It does not matter who was right and who was wrong, but the episode brought into sharp relief the issue of the company as an independent institution versus the company as a family-controlled vehicle. At its heart this is the key issue of corporate governance, something with which we are all struggling, East and West.