EFG-Hermes suitor's takeover approach stalls

Reuters, Monday 2 Jul 2012

Planet IB's attempt to acquire investment bank hits a hurdle as it fails to secure enough shares to challenge management

The investment bank's Cairo HQ (Photo: Reuters)

An attempt by a group of Egyptian and Arab Gulf investors to buy the Middle East's biggest home-grown investment bank EFG-Hermes has stalled after the consortium failed to secure enough EFG shares to challenge management.

Planet IB made its $1 billion approach after the Cairo-based bank announced plans to fold its main investment banking operation into a joint venture controlled by Qatar's QInvest.
EFG shareholders approved the Qatari tie-up on 2 June. EFG's share price tumbled last year following a popular uprising, and the deal with the tiny, energy-rich Gulf state would give it more resources to expand its business across the region.
Planet, whose backers included telecoms tycoon Naguib Sawiris, one of Egypt's richest men, was trying to secure a 5 per cent stake in EFG in the hope it would force management to consider its offer.
Sameh Mohieldeen, Planet's executive director, said on Monday that the consortium had only secured between 2.3 and 2.5 per cent of EFG because many institutional shareholders were unwilling to defy the bank's biggest owners.
"The minority stake is very fragmented, so we could not reach out to as many shareholders as we wanted to," Mohieldeen told Reuters. "The main institutional shareholders, although they voted against the QInvest deal, still don't want to go out of the herd."
According to Reuters data, the biggest shareholders in EFG are the government of Dubai, the Shobokshi family of Jeddah, Norway-based Skagen AS, OppenheimerFunds Inc. of the United States and the government of Egypt.
The Planet consortium said last month it was prepared to pay a minimum of LE13.50 per share for EFG, which would value it at $1.1 billion at least.
Mohieldeen said Planet had done all it could to prove it had the financial firepower to buy EFG and the issue was now in the hands of Egypt's financial market regulator EFSA.
"If they really care about the interests of minorities, we are still willing to go to a tender offer subject to due diligence," he said. "We have an amazing post-acquisition plan but there is nothing we can do now." 
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