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Wednesday, 25 May 2016

Abraaj, CBC / Al Nahar and Nestlé in M&A boomlet

We have a mini M&A boomlet this morning, ladies and gentlemen, with news from the retail, media and food services sector again underscoring our thesis that while manufacturers and pure importers look for a razor sharp enough to slash their wrists, those building plays on the Egyptian consumer story are actually rather optimistic.

U.S.-based buyout shop TPG Capital is reportedly in talks to acquire the Spinneys supermarket chain in Egypt from leading emerging markets PE outfit Abraaj Group, two sources told Bloomberg. If completed, the acquisition, which could be worth USD 100 mn, would be TPG’s first transaction in Egypt. TPG “would enter into a franchise agreement with Spinneys as part of the deal, one of the people said. No final decision has been made and talks may still falter, the people said.” Representatives from TPG and Abraaj declined to comment, Bloomberg noted. According to a Middle East Economic Digest research document reproduced on Abraaj Group’s website, Abraaj bought a 46% stake in the storied retailer in 2004 for USD 27.1 mn from Cupola group, which retained 35% ownership. TPG’s investments include Airbnb, Continental Airlines, Box, Burger King, Ducati, SaxoBank, Spotify and Uber, among others. The outfit has about USD 70 bn in assets under management.

Nestlé is in talks to acquire a stake in Caravan Foods, which sells coffee products under the Bonjorno brand name in Egypt, Al Mal reported. Nestlé has made an offer for the company, sources said, but negotiations are still in preliminary stages. The size of the stake Nestlé is bidding for and its valuation of Caravan Foods was not given, with Nestlé refusing to comment. Al Mal says Caravan Foods is soliciting investors to finance its growth plans and has already appointed CI Capital as its sell-side advisor.

Meanwhile, television networks Al-Nahar and CBC will be merge under “one economic entity,” according to Al Borsa. Al Ahram says the networks will create a holding company managing both of them to “face major changes” in the market. The decision was reached following meetings between Al-Nahar CEO Alaa El Kahky and CBC owner Mohamed El Amin that led to their agreement on the merger. The merger will take place in six months’ time, said El Kahky, who encouraged other media companies to join the alliance, Al Shorouk reports. There were no financial details or word on advisors provided, nor was there news on the management, legal structure or branding for the new entity.

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