Back to the complete issue
Thursday, 11 April 2019

OIH bid for Nile Sugar draws controversy, company defends its stance

M&A WATCH- OIH bid for Nile Sugar draws controversy: Naguib Sawiris’ majority-owned Orascom Investment Holding’s (OIH) c. EGP 3.6 bn bid to acquire the Sawiris family-owned Nile Sugar Company is being questioned by analysts and minority shareholders, according to Mubasher. Shuaa Securities said in a research note that the move is not “ideal” an inflated valuation that gives Nile Sugar a valuation higher than OIH’s entire market cap and necessitated a capital increase. The capital increase would significantly reduce the market appeal of OIH, the investment bank argued. OIH’s share price lost a combined 14% over the three sessions following Shuaa’s observation.

Company defends its position, says decision rests with shareholders: OIH said it hired independent legal and financial advisors to conduct due diligence on Nile Sugar and a separate corporate finance firm to do the valuation, according to a press release picked up by Al Mal. OIH said it sees sugar manufacturing as a core activity as OIH ventures into the food processing business and noted that the transaction cannot go ahead without the consent of minority shareholders.

Background: OIH’s board of directors approved on Sunday the fair value assessment for the bid conducted by adviser BDO Corporate Finance. The acquisition had originally been on track to close by the end of 2018, but carried over into this year. OIH — previously known as Orascom Telecom Media and Technology Holding (OTMT) — has been shifting its investment strategy over the past three years away from media and toward the financial, real estate, agriculture, and logistics sectors.

Enterprise is a daily publication of Enterprise Ventures LLC, an Egyptian limited liability company (commercial register 83594), and a subsidiary of Inktank Communications. Summaries are intended for guidance only and are provided on an as-is basis; kindly refer to the source article in its original language prior to undertaking any action. Neither Enterprise Ventures nor its staff assume any responsibility or liability for the accuracy of the information contained in this publication, whether in the form of summaries or analysis. © 2022 Enterprise Ventures LLC.

Enterprise is available without charge thanks to the generous support of HSBC Egypt (tax ID: 204-901-715), the leading corporate and retail lender in Egypt; EFG Hermes (tax ID: 200-178-385), the leading financial services corporation in frontier emerging markets; SODIC (tax ID: 212-168-002), a leading Egyptian real estate developer; SomaBay (tax ID: 204-903-300), our Red Sea holiday partner; Infinity (tax ID: 474-939-359), the ultimate way to power cities, industries, and homes directly from nature right here in Egypt; CIRA (tax ID: 200-069-608), the leading providers of K-12 and higher level education in Egypt; Orascom Construction (tax ID: 229-988-806), the leading construction and engineering company building infrastructure in Egypt and abroad; Moharram & Partners (tax ID: 616-112-459), the leading public policy and government affairs partner; Palm Hills Developments (tax ID: 432-737-014), a leading developer of commercial and residential properties; Mashreq (tax ID: 204-898-862), the MENA region’s leading homegrown personal and digital bank; Industrial Development Group (IDG) (tax ID:266-965-253), the leading builder of industrial parks in Egypt; Hassan Allam Properties (tax ID:  553-096-567), one of Egypt’s most prominent and leading builders; and Saleh, Barsoum & Abdel Aziz (tax ID: 220-002-827), the leading audit, tax and accounting firm in Egypt.