According to the FRA, FAB requested acquiring 51 percent of EFG Hermes’ shares in accordance with Law no.95 for 1992, and it will conduct its due diligence soon.
The FRA set the in-principal price of EFG Hermes’ purchase offer at EGP 19 per share until what is due is given.
It added that the purchase process will be initiated and that the final share price will be set in light of the results of the due diligence.
For its part, FAB revealed in a statement that the offer is worth EGP 18.5 billion ($1.2 billion) and represents a 21 percent premium to EFG Hermes’ closing price of EGP 15.74 on the EGX on 8 February.
It added that the offer price also represents a premium of 32 percent, 40 percent, and 48 percent over the three-month, six-month, and twelve-month volume-weighted average price, respectively.
As of 30 September 2021, EFG Hermes’ total assets valued at EGP 49.6 billion ($3.2 billion), with a net profit exceeding EGP 1.04 billion (around $67 million) for the first nine months of 2021.
“The FAB believes that the non-binding offer represents an attractive liquidity event and a compelling value proposition for EFG Hermes’ shareholders, reflecting the company’s robust fundamentals, and strong future growth prospects. This potential transaction would represent a significant milestone for the FAB, in line with the bank’s long term strategic ambitions to become the reference institution for investment banking in the region.” the FAB said in its statement.
“It provides enhanced scale, specialisation, growth levers, and revenue synergies, strengthening FAB’s offering and regional presence. This potential transaction will build on EFG Hermes’ strong investment banking capabilities, track record, and reputable brand.”
For its part, EFG Hermes announced that it is currently considering the FAB offer and it will disclose any further details according to updates in this respect.
In May 2021, the Cabinet approved acquisition deal of the state-owned Arab Investment Bank (AIB) by EFG Hermes (with 51 percent stake acquired) and the Sovereign Fund of Egypt (with 25 percent stake acquired.)
Egypt has witnessed a boom in merger and acquisition (M&A) activity recently.
M&A transactions in the Egyptian market jumped by more than three-fold in 2021, increasing by 394 percent Y-o-Y compared to 2020, according to a report published by Baker McKenzie.
This uptick came despite the severe impacts of the COVID-19 pandemic and its associated variants on the global and local levels.
Egypt’s economic performance has proved its resilience throughout the pandemic, with expectations set for the country’s economy to approach its pre-pandemic level in the current FY2021/22, with a projected 5.5 percent in real GDP growth, according to the World Bank’s Egypt Economic Monitor report released on Tuesday.
The World Bank and the International Monetary Fund also upgraded Egypt’s economic growth forecast in FY2021/22 to 5.5 percent and 5.6 percent, respectively.
Egypt plans to allow the private sector to play a greater role in the Egyptian market in FY2022/23 and to extend greater incentives in terms of tax and fees deductions in this regard with the objective of attracting more foreign investors to the domestic market.