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Sunday, 6 November 2022

UAE’s National Paints wants Pachin

UAE’s National Paints makes play for Pachin: Dubai-based National Paints Holdings (NPH) has launched a takeover bid for Paint and Chemical Industries (Pachin), becoming the third company this year to express interest in acquiring the state-owned firm. NPH has submitted a non-binding offer to purchase 100% of Pachin for EGP 29 per share, the Egyptian paint company said in an EGX disclosure (pdf) Thursday. The offer values the EGX-listed company at EGP 696 mn.

No final price yet: Pachin said NPH made the start of due diligence a condition of determining a final price. Pachin said it is currently reviewing the offer with advisor Al Ahly Pharos.

NPH’s initial offer is far higher than what two existing bidders had put on the table: Universal Building Materials and Chemicals (Sipes) has offered to purchase 100% of the company at EGP 17.50-18.50 per share. Before it dropped its bid, Saybad Industrial Investment had offered to pay EGP 16.50-18.75 per share, valuing the firm at up to EGP 450 mn.

NPH wants to be big in Egypt: NPH wants to acquire Pachin to “deepen and expand its position” in Egypt, and aims to eventually become the market leader, the company wrote in its offer letter to Pachin.

REMEMBER- The play for 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: Al Ahly Pharos is providing financial advice to Pachin while Adsero-Raji Soliman & Associates is counsel.

CAPRICORN SHAREHOLDERS COULD TANK NEWMED TIE-UP-

Major shareholders in Capricorn aren’t happy about the proposed NewMed merger: Six shareholders of Capricorn Energy have spoken out publicly against plans to sell the firm in an all-share tie-up with Israel’s NewMed, Reuters reports. The investors are seeking to block the transaction, which they say undervalues Capricorn.

Bad news for us? The Capricorn-NewMed merger would hand NewMed control of Capricorn’s assets in Egypt, paving the way for closer energy ties between Israel and Egypt and creating what the companies had described as a “MENA gas and energy champion.” That could boost Egyptian ambitions to take Russia’s place as one of Europe’s go-to energy suppliers, particularly after Egypt and Israel signed a landmark gas export agreement in June to ramp up exports to the EU.

The shareholders control more than a third of the company, and include the firm’s second-largest shareholder, Madison Avenue Partners, which holds an 8.06% stake.

What’s the issue? The co-chief investment officer of Kite Lake Capital Management, which owns almost 7.4% of Capricorn, said the terms are “unnecessarily biased” towards NewMed while Madison Avenue believes the transaction undervalues the business. The head of climate solutions at Legal & General, which owns almost 4% of the company, said that “we are not convinced that this proposal is the best path forward to maximize shareholder value and minimize future environmental risks.”

This wouldn’t be the first time: This is the second time Capricorn shareholders have revolted against management’s sale plans, after scuppering a proposed merger with Tullow Oil earlier this year.

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