** #1 M&A WATCH- Medhat Khalil & Co to submit mandatory offer for 100% of Raya? Conflicting media reports emerged yesterday over reports that Raya founder Medhat Khalil is leading a group that will submit a mandatory tender offer (MTO) to acquire 100% of Raya Holding for Financial Investments by 27 November. Khalil, the company’s chairman, was quoted in the local press (here and here) as saying he would submit an MTO next month to acquire 100% of Raya at EGP 10 per share. The reports claim that Khalil is making the bid after the Financial Regulatory Authority (FRA) ordered that he do so or reduce his holdings, having found that Khalil and related parties control a combined 42% stake in the company. Under securities regulations, going over the 33% ownership mark triggers the MTO requirement.

The MTO wasn’t ordered by the regulator? Khalil denied in a statement to the EGX (pdf) that his company had received any such notice from FRA — and said that he and his immediate family own less than one third of Raya’s shares.

Unwinding Raya trades: The news prompted the EGX yesterday to reverse all transactions on Raya’s shares from Monday and Tuesday, the local press claims, meaning the stock is expected to open today’s session at EGP 6.49 per share.

Khalil is buying at a premium if he goes ahead with the MTO by month’s end. EGP 10 is nearly 45% above the company’s share price prior to the announcement. Shuaa Securities Egypt said in a research note yesterday that “not only is it relatively [inexpensive], but it is also trading at below book value.”

What is Raya, anyway? It’s not the same beast that once sold you your beloved Nokia and that bet the house on becoming the nation’s third mobile network operator, losing to Etisalat, well over a decade ago. Today, Raya is an investment company with a private-equity-like mindset. That attitude saw it spin off Raya Contact Centers (Egypt’s largest provider of outsourcing services) last year in an IPO. In addition to Raya Contact Center (where it is still majority shareholder), Raya’s investments today include:

• BariQ, an exporter of recycled PET;
• E-payments outfit Aman;
• Plenty of food investments, including Ovio (one of our favorite restaurants in our fair town) and frozen food producers, a pasta business (in Poland, of all places);
• A partnership to build a washing machine plant with Samsung;
• And other ventures ranging from data centers to a tuktuk partnership with Piaggio and venture into Uganda.