The acquisition involves taking over a 30% stake in Eastern Company.
The total deal value of EGP 19.36 billion (USD 625 million) is equivalent to USD 28.9 per share - File Photo
In a recent announcement, the Ministry of Public Business Sector revealed details of the sale of a 30% stake in the Eastern Company, a leading chemical industry conglomerate, to Global Investments Holding Company Limited.
As of today, 669 million shares of the Eastern Company, constituting 30% of the company's total shares, were executed in a high-volume transaction.
Eastern Company had previously stated that Global Investments Holding, based in the UAE, had already paid EGP 16.4 billion (approximately USD 530.21 million) to the Holding Company for Chemical Industries. This payment is part of the agreed-upon acquisition deal finalized in September of the previous year.
In a disclosure to the Egyptian Exchange, Eastern Company reported that the total value of the deal is estimated at USD 625 million. The remaining amount of approximately USD 94.8 million will be paid in installments according to the agreed-upon schedule.
The acquisition involves taking over a 30% stake in Eastern Company, Egypt's largest cigarette producer, from the state-owned Holding Company for Chemical Industries.
The deal received approval from the Egyptian Cabinet on September 3, 2023. EFG Hermes acted as the sole financial advisor to Global Investments for the completion of the acquisition.
This move results in the reduction of the Holding Company for Chemical Industries' stake in the capital of Eastern Company from 55.95% to 25.95%.
Here are the key details of the agreement:
Stock Price and Payment: The buyer will purchase the shares at EGP 24.52 per share, totaling EGP 16.43 billion. The entire amount will be paid in US dollars, converted from abroad to the seller on the deal completion date, based on the Central Bank of Egypt's announced exchange rate for selling the US dollar.
Additional Payment: The buyer commits to an additional payment of EGP 4.38 per share, amounting to EGP 2.92 billion. This extra amount is an integral part of the total transaction value.
The total deal value of EGP 19.36 billion (USD 625 million) is equivalent to USD 28.9 per share. The payment will be made according to the schedule outlined in the agreement.
Important Points in the Agreement:
The buyer waives the right to sell or dispose of some unused assets owned by Eastern Company, valued at approximately EGP 2 billion, in favor of the Holding Company for Chemical Industries, even though these assets were part of the company's fair value assessment.
Profit-sharing: 70% of the distributed profits from the company's share will go to the Holding Company, and 30% to the buyer. This is despite the company's profits for the fiscal year ending on June 30, 2023, being part of the fair value assessment.
The buyer has initiated agreements with several banks to provide banking credits of USD 150 million to support Eastern Company's raw and non-tobacco material suppliers. This aims to enable the company to resume production and accelerate the return of its product prices to normal.
The Holding Company has executed all commitments and prerequisites outlined in the agreement. On November 16, 2023, the sale of 669 million shares of Eastern Company was completed, marking the transfer of a 30% stake through transaction mechanisms.
