MNHD shareholders back board, say offer price was too low: Madinet Nasr Housing and Development (MNHD) shareholders meeting in a general assembly yesterday rejected a takeover bid from SODIC, saying the offer price was too low, an exec at MNHD told Enterprise. Just three investors voted in favor of allowing the upmarket developer to start due diligence, leaving almost all the company’s shareholders siding with the board, which last month rejected the offer that valued the company at up to EGP 6.36 bn.

The two companies hit a deadlock weeks ago: SODIC has said it will not revise its offer upwards without getting the green light to conduct due diligence. The upmarket developer had offered to pay EGP 3.20-3.40 per share to purchase up to 100% of the state-owned developer in a potential all-cash transaction. MNHD’s shares on the EGX closed at EGP 2.40 yesterday.

The offer price is far lower than what MNHD thinks is fair value: MNHD CEO Abdullah Sallam said last month that MNHD believes its portfolio of undeveloped land is worth 3-4x more than what SODIC has offered for the company as a whole.

MNHD’s current owners: State-owned institutions collectively own the largest stake in MNHD, with the Holding Company for Construction and Development holding 15.2%, the National Investment Bank owning 3.7% and Banque Misr holding 3.5%. BIG Investment Group is the largest single shareholder with a 19.9% stake, B Investments owns 7.5% and 20.4% is held by foreign institutions.

MNHD and SODIC have been dancing (on and off) for years: With different shareholding structures on both sides and a different management team at MNHD at the time, the two started talking about combining their businesses in early 2018, which months later saw SODIC make an offer to acquire at least 51% of MNHD through a direct share swap that the two positioned as what would have been Egypt’s largest-ever M&A at the time. Talks fell through after they failed to reach an agreement on the share-swap ratio.

Advisors: CI Capital is acting as SODIC’s financial advisor, while MNHD has not appointed an investment bank. Zaki Hashem & Partners is MNHD’s legal counsel.

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