Back to the complete issue
Sunday, 24 July 2022

Let the negotiations over Pachin begin

The board of state-owned, EGX-listed paint maker Paint and Chemicals Industries (Pachin) has rejected Saybad Industrial Investment’s acquisition bid, saying in a filing to the bourse (pdf) on Thursday that it undervalues the company. Saybad earlier this month offered to pay EGP 16.00-16.50 per share to acquire up to 90% of the company, valuing it at EGP 384-396 mn, a price tag that Pachin said “does not reflect the true value of the company and its assets.”

It’s still a premium: Shares in Pachin were up nearly 2% to EGP 15.92 at the close of trading on Thursday.

It’s not over, folks: The company plans to hold talks with the Saybad to negotiate a price that’s more amenable, the statement reads. Pachin will decide on whether to proceed with due diligence on the transaction at the next general assembly meeting.

Refresher: Saybad Industrial Investment is an Egyptian outfit consisting of a group of local investors who are active in the paint industry here and across Asia, according to the EGX disclosure. Around 54% of Pachin is currently owned by state-owned companies and banks, making the sale a part of the state’s privatization plans, a source with first-hand knowledge of the transaction told Enterprise last week.

Even with the current climate, acquisition targets are feeling lowballed: This is the second rejection by a major listed M&A target in as many days, after Madinet Nasr Housing and Development’s (MNHD) board last week said SODIC’s bid was too low, and asked the company to substantially raise its offer.

Advisors: Catalyst Partners is acting as Pachin's financial advisor. Adsero–Raji Soliman & Associates is the firm’s legal advisor.

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.