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Monday, 18 January 2021

And, scene: Act I of the Great Lebanese Bank Sell Off

M&A WATCH- It’s official: Blom Bank is selling its Egypt arm to Bahrain’s Bank ABC in an EGP 6.7 bn transaction, the two parties confirmed in a statement yesterday after Reuters reported last week that the sale was wrapping up. The two hope to close the sale by the end of 1H2021 after getting clearance from the Central Bank of Egypt and the Financial Regulatory Authority.

Blom is pulling the pin on Egypt as Lebanese lenders face pressure to hike their equity by 20% to cope with recent market challenges in their home market.

That’s a 1.4x premium to book and implies a PE ratio of about eight, based on Blom Bank Egypt’s September financials, EFG Hermes wrote in a note yesterday.

Egypt is “one of the most attractive markets in the region,” said Bank ABC CEO Khaled Kawan. Bank ABC is acquiring the 99.4% of Blom Egypt held by Blom’s Lebanese parent and will make a mandatory tender offer for the remaining 0.6%.

How big will Bank ABC be post-transaction? The bank hopes to crack the ranks of the top 20, it said in a statement. It already offers commercial, retail and other banking and financial services in Egypt and runs a 27-branch network. Add Blom’s 41 branches in Egypt and the new Bank ABC will have 68 points of presence nationwide.

Bank ABC expects the transaction to wrap in 2Q2021, it said in a filing with Bourse Bahrain (pdf).

DID YOU KNOW? The Olds among us will remember that Blom Bank was formerly known as Misr Romania Bank. Blom bought it back in 2006 when the Central Bank of Egypt drove a wave of consolidation in the banking industry. In the years since, the CBE has resolutely refused to issue new banking licenses, saying that any player — foreign or domestic — who passes the sniff test will need to buy into the sector through acquisition.

WHO’S NEXT? As we noted this yesterday: First Abu Dhabi Bank’s potential USD 700 mn acquisition of Bank Audi Egypt, which has been in the works since the two resumed negotiations in September.

ADVISORS- HSBC is acting as sole financial advisor to Bank ABC, with Freshfields Bruckhaus Deringer and Zulficar & Partners acting as legal advisors. Blom Bank Lebanon was advised by CI Capital, while Baker McKenzie acted as legal counsel.

OTHER M&A NEWS- The Financial Regulatory Authority has approved a mandatory tender offer for up to 90% of El Nasr for Manufacturing Agricultural Crops by a consortium of Al Raed for Agricultural Production and New Smart Construction Company, the regulator said in a filing (pdf). The consortium is targeting some 7 mn shares at EGP 45 apiece, giving the MTO a potential value of EGP 315 mn.

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