** #1 M&A WATCH- SODIC bidding to acquire at least 51% of MNHD in all-share transaction: Upmarket real estate developer SODIC announced yesterday (pdf) it intends to make a mandatory tender offer to acquire at least 51% of Madinet Nasr Housing and Development (MNHD) through a direct share swap. SODIC has preliminarily set the swap ratio at two shares of MNHD for one share of SODIC, and the transaction could allow MNHD to remain listed on the EGX, according to the statement. The transaction is contingent on the completion of due diligence and of a valuation report by an independent financial adviser. MNHD is studying the offer, which will be presented to its board of directors at its next meeting, the company said in a separate statement (pdf). Bloomberg and Reuters both have the story.

The transaction would bring “the combined entity’s total undeveloped land bank to over 15 mn square meters with over 15 years of development visibility, and creates one of the largest real estate developers in Egypt. In a fragmented real estate market, the combined entity would consolidate a wealth of experience, as well as sales and execution capabilities of both companies,” our friends at SODIC said in a statement.

The sell-side so far likes what it has seen. Shuaa Capital notes that the transaction could see SODIC “utilize its know-how in developing the combined land bank” and give the two the “benefit of a larger footprint covering both eastern and western Cairo.” Naeem, meanwhile, cites “MNHD’s rich land bank [and] SODIC’s brand name and execution expertise” and says the transaction would be at a 46% premium to MNHD’s share price prior to the announcement.

Background: MNHD CEO Ahmed El Hitamy had previously said that a share swap agreement would be the easiest and least costly option, as well as “the path of least resistance.” The two companies opened talks on a potential merger or acquisition back in April, which MNHD said would bring together its land bank and strong sales track record with “SODIC’s premium brand name and track record as a prominent real estate developer in Egypt.”

Advisers: Reports had earlier suggested that MNHD had tapped EFG Hermes to advise on the transaction, while Zaki Hashem & Partners are serving as legal counsel. SODIC had previously appointed CI Capital and White & Case as its advisers.