Egypt's market regulator has rejected France Telecom's (FT) bid for outstanding shares in mobile phone firm Mobinil, over which FT and the other main shareholder Orascom Telecom (OT) are in dispute.
A source close to the matter later told news agency Reuters in Paris that FT had cancelled its offer to buy out minority shareholders. A company executive said on Tuesday the firm was ready to fight a legal battle to resolve the row if necessary.
Orascom Telecom and France Telecom have been at loggerheads over the price the French firm should pay for outstanding shares, after an arbitration court ruled FT should buy OT's stake in a holding company that owns 51 percent of Mobinil at a price equivalent to 273.26 Egyptian pounds ($48.62) per share.
OT and the regulator both said this decision obliged FT to offer for the entire company at a similar price. FT has said any offer would be voluntary.
Egypt's Capital Markets Authority, which rejected as too low an earlier FT bid for the minority stake, said on Wednesday it "had rejected the obligatory purchase offer as it violated the principle of giving equal opportunity" to all shareholders.
The CMA did not give the offer price, but FT said on May 20 its offer stood at about 1.5 billion euros ($2.1 billion), equating to about 239 pounds a share based on Reuters data.
Mobinil shares, which had been suspended since May 19 pending the CMA ruling, were down 2.3 percent at 195 pounds at 1008 GMT.
The CMA disputed the ownership of assets FT claimed made its stake more valuable, cited disputes over the distribution of retained earnings and trademarks, and did not accept an FT claim that management fees paid to the holding company increased its value because these fees had not been disclosed to shareholders.
"(The rejection) is going to put some negative sentiment on the whole market. I don't know how long it will last. It could be short term. I don't think it will last too long," said Hashem Ghoneim, vice chairman of Pyramids Capital.
OT shares, also suspended since May 19, dipped as low as 34.67 pounds in early business on Wednesday, before paring some losses to trade down 0.7 percent at 35.42 pounds by 0952 GMT.
Orascom posted a 66 percent drop in net income after the close of trade on Tuesday, sharply lower than two analysts had forecast.