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Monday, 22 August 2022

As a bidding war heats up, Pachin’s biggest shareholder is doing its own FV and seeking investment bankers

Pachin’s biggest shareholder to hire advisors for fair value study: Chemical Industries Holding Company (CIHC) will appoint an independent financial advisor to value Paint and Chemical Industries’ (Pachin) amid a bidding war for the EGX-listed paint company, CIHC Chairman Emad El Din Mostafa told Enterprise. CIHC — Pachin’s largest shareholder — has chosen to do its own fair value study because the offers received by Saybad Industrial Investment and Universal Building Materials and Chemicals (Sipes) have not been acceptable and “do not reflect the fair value” of Pachin, Mostafa said.

Who’s offering what: Saybad’s latest bid offered to pay EGP 16.50-18.75 per share for 100% of the company, valuing it as much as EGP 450 mn. This was a revised offer in response to a rival bid from Sipes which said it would purchase all of the company’s shares at EGP 17.50-18.50.

Expect advisors to be named by week’s end: CIHC has received offers from potential advisors and expects to make a choice by the end of the week, Mostafa told us. The company is also looking to bring on board investment bankers to advise it, though Mostafa did not specify a deadline for their appointment.

CIHC could offload its entire stake — for the right price: CIHC currently holds 44.6% of Pachin, while Banque Misr holds another c.11% of the company. Together, these two shareholders can offload their positions and give the acquiring company a majority position in Pachin, Mostafa said. “The bidders are looking to get a controlling stake. We [CIHC and Banque Misr] are willing to give that controlling stake if we get an offer that matches the company’s fair value,” he said.

Market reaction was muted: Pachin’s shares inched up 0.1% in trading yesterday to close at EGP 18.00 per share, after hitting an intraday high of EGP 18.17.

REMEMBER- The play on Pachin comes amid the government’s privatization push, which should see it reduce its involvement in or exit certain industries to make way for the private sector. Pachin is currently approximately 54% owned by state-owned companies and banks.

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

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