Kuwaiti logistics provider Agility said on Tuesday it agreed a $250 million option to buy a stake in Iraq's Korek Telecom.

The deal is part of Agility's move to diversify away from its core business.

Agility's Dubai-based private equity unit, Alcazar Capital, agreed a "strategic" partnership with Irbil, Kurdistan-based Korek, Agility said in a statement on the Kuwaiti stock exchange Web site.

The purchase would provide Korek with "financial, administrative and operational flexibility that would enable it to focus on fulfilling the terms of Iraq's mobile licence contract," Agility said.

The two companies still have to reach final agreement on the transaction, it said without elaborating on the nature of the option.

Agility set up Alcazar this year to make acquisitions as part of a strategy to reduce its reliance on contracts with the US military to supply troops in Iraq and Afghanistan, its main source of income.

"We have such a strong network, especially in emerging markets, and quite often see very strong and lucrative business opportunities ... outside our core business," said an Agility spokeswoman.

The planned stake in Korek would help the telecoms company hold a planned initial public offering within four years as its licence requires, Agility said without elaborating.

"This partnership forms a concrete step to meeting that objective," Korek Chairman Mustafa Barzani was quoted as saying in the statement.

Korek paid $1.25 billion for one of three mobile phone licences Iraq sold in an auction last month and has 1.2 million customers, mainly in Iraq's northern Kurdish region.

Agility's profits have surged during the past five years on supply deals with the US military.

In June, it was part of a group with US firm DynCorp International that won a 10-year, $50 billion logistics contract to supply food to US troops in Iraq. -Reuters