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Tuesday, 23 November 2021

Aldar-ADQ acquisition of SODIC approved by FRA

Aldar-ADQ bid for SODIC is one step closer to materializing after getting regulatory green light: The UAE’s Aldar Properties and sovereign wealth fund ADQ’s bid to acquire 90% of upmarket real estate developer SODIC is poised to move forward after the Financial Regulatory Authority (FRA) greenlit the offer yesterday, according to a statement (pdf). The market regulator’s signoff comes two months after the consortium presented its offer in September. The regulator released the statement after trading on the EGX closed yesterday.

What’s being offered: The Emirati consortium — which is 70% owned by Al Dar and 30% owned by ADQ — is looking to pay EGP 20 per share in an all-cash transaction, valuing SODIC at around EGP 7.1 bn (USD 452 mn). The final bid saw the consortium up its offer from its original EGP per share 18-19 bid in March, which would have valued the company at EGP 6.6 bn.

Some shareholders want a valuation made public: SODIC had ordered a fair value assessment back in April. If the company makes the results public, it would help “guide minority shareholders on the real value of the company,” Act Financial CEO Bassem Azab told Enterprise. Act is part of a consortium with Hassan Allam Properties and Concrete Plus Engineering and Construction that together is the company’s single largest shareholder, owning a 15% stake. Sharing the fair value assessment with the rest of the market “should help shareholders make the right decision” on Aldar’s bid, Azab said.

What now? Now that the mandatory tender offer got final regulatory approval, the details of the offer should be made public within the coming days and shareholders will be given the chance to weigh in. Shareholders must agree to sell at least 51% of SODIC’s shares for the agreement to go through. Market regulations for MTOs typically give shareholders 10-30 working days to respond and Aldar has the right to adjust its offer price throughout the process.

The interest in SODIC — particularly from a regional player of Aldar’s size — should have a positive impact on the country’s real estate industry as a whole, as it signals foreign appetite for a sector that is underperforming largely because of market dynamics, Azab said. “Even if the transaction doesn’t go through for any reason, just the expression of interest that people want to buy a company in Egypt is a vote of confidence in the economy and stock market,” Azab says. There are also multiple attractive potential targets in other industries for inbound M&A, Azab says, suggesting this is the “key road going forward” to boost the EGX.

Aldar might want more of Egypt’s real estate sector: The acquisition of SODIC “is a part of Aldar’s overall expansion strategy into the attractive Egyptian real estate market, with Aldar currently assessing several opportunities,” it said in September.

OTHER M&A NEWS-

Irish insulation manufacturer wants a piece of construction player ICON: Ireland-based insulation manufacturer Kingspan is bidding to acquire at least 65% of the Industrial Engineering Company for Construction and Development’s (ICON) sandwich panel manufacturing division, ICON said in a disclosure (pdf) to the EGX. The potential acquisition would see ICON spin off the division (which manufactures components used to insulate the exteriors of buildings) into a separate company in which Kingspan would then buy a stake. The non-binding offer will be presented to ICON’s board of directors to assess.

How much are they offering? Kingspan said it would offer the equivalent of 8.5x the unit’s 2021 EBITDA.

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