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Wednesday, 7 September 2022

Expedition’s offer undervalues cheese maker Domty by 38%, fair value study suggests

BDO has valued Domty at EGP 6.90 per share — 38% higher than the price that the Expedition Investments-led consortium is offering shareholders in its ongoing mandatory tender offer, the cheesemaker said in an EGX disclosure (pdf) yesterday.

REFRESHER- Shareholders have until 14 September to sell their holdings to the consortium, which is offering to pay EGP 5.00 a share to acquire up to 34% of the EGX-listed company (c. 96.2 mn shares). Domty’s board is yet to publicly respond to the offer or give a recommendation to the company’s shareholders. It commissioned BDO last month to conduct a fair value study (pdf), one day before the MTO started.

That fair value study is now out: BDO published the report (pdf) yesterday after it was reviewed by the Financial Regulatory Authority (FRA).

What happens now? It’s unclear whether the board will now respond to the offer or make a recommendation to the shareholders. As of last Thursday, the consortium was almost halfway to its target, with shareholders agreeing to sell 40.5 mn shares.

REMEMBER- Domty’s majority shareholders are among the investors bidding for the shares: The Damati family — which founded Domty and already control 56% of the company — are part of the consortium and also own minority stakes in Expedition. Expedition, a special purpose vehicle domiciled in Mauritius, is controlled by investors in Egypt and the Gulf. Success in the MTO would hand the consortium control of 90% of the company’s shares.

Advisors: EFG Hermes is quarterbacking the transaction and Matouk Bassiouny & Hennawy is acting as counsel to Expedition.

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