Back to the complete issue
Tuesday, 30 November 2021

SODIC approves Aldar offer despite falling short of fair value report benchmark

SODIC’s board of directors has approved a bid from Aldar Properties and ADQ despite the offer price falling short of the benchmark set in a fair value report, according to an EGX filing (pdf). The Emirati consortium has offered to purchase 90% of the company at EGP 20.00 per share, valuing the company at EGP 7.1 bn. That’s almost 20% below the EGP 23.42 share price the upmarket developer’s financial advisor BDO had set in its fair value study. SODIC declined to comment further on the statement when we asked yesterday.

The rationale: The developer cited the “current global economic conditions and the effect of the covid-19 pandemic” as well as the consortium’s “economically strong” positions as reasons for backing the transaction at the current price. The consortium is also reportedly not planning to up its bid if shareholders reject the price, after having raised its bid once before from EGP 18-19.

There’s also the fact that Aldar would be a heck of boost for the domestic real estate industry, bringing know-how and a competitive metabolism honed in the ultra-competitive Emirati market. (The transaction going through would also be also a great sign for other foreign investors watching the transaction, but that’s another issue.)

Where does that leave the shareholders? It appears that SODIC’s single largest shareholder — a consortium made up of Act Financial, Hassan Allam Properties and Concrete Plus Engineering and Construction, who together own a 15% stake — has yet to make a decision. Act had been waiting on SODIC to make public the results of the fair value assessment to help “guide minority shareholders on the real value of the company,” CEO Bassem Azab previously told Enterprise. The shareholders now have until 7 December to make a decision. Shareholders need to agree to sell at least 51% of SODIC’s shares for the MTO to be successful. Act Financial did not return a call yesterday requesting comment.

SODIC’s shares closed yesterday at EGP 19.60 each, surpassing the upper end of the EGP 13.95-19.50 band in which they’ve been trading for the past 52 weeks, according to market data from the EGX.

FOLLOW UP- A story we picked up from Al Shorouk earlier this week incorrectly reported that EFG Hermes had decided to respond to the MTO by selling its 2.4% stake in SODIC. A source with direct knowledge of the matter has informed us that EFG offloaded its stake long before the Aldar-ADQ bid.

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.