Cairo: EFG-Hermes Holding rejected a bid from Planet IB that valued the biggest publicly-traded Arab investment bank at a 23 per cent premium to the closing price in favour of a joint-venture with Qatar’s QInvest.
Planet IB, a company backed by investors including Egyptian billionaire Naguib Sawiris, offered 13.5 Egyptian pounds a share for Cairo-based EFG-Hermes, Planet IB said in an e-mailed statement on Saturday. That values EFG at 6.46 billion pounds (Dh3.92 billion), according to Bloomberg calculations. The shares closed at 10.97 pounds in Cairo May 31. They dropped 9.9 per cent at the open in Cairo on Sunday as one trade was made before the shares were suspended after tumbling by the daily limit.
The offer didn’t provide a commitment that a bid will be presented after due diligence and lacked details on the “financing resources for the bid and information about the investors financing it,” EFG-Hermes said in a regulatory filing on Sunday. Shareholders instead approved an agreement that will give QInvest, a unit of Qatar Islamic Bank, 60 per cent in the joint venture, it said. The transaction requires regulatory approval.
“I will not shy away from Egypt’s first hostile takeover,” Planet IB CEO Ahmad Al Hussainy said on Saturday in a statement to Bloomberg. “I have done Egypt’s first corporate bond issuance, Egypt’s first leveraged buyout, Egypt’s first securitisation transaction."
Planet said it informed EFG-Hermes’ board of the terms of its offer before the meeting about the QInvest merger.
Planet IB said on May 31 it secured $650 million in debt and “substantial equity commitments” from domestic, regional and international investors, including a member of the ruling family of Sharjah. Al Hussainy, former managing director at Cairo-based private equity firm Citadel Capital SAE, said the offer hinged on EFG-Hermes’ management allowing his company to conduct due diligence.
“If EFG-Hermes is serious about entertaining a tender offer from Planet IB, it must immediately postpone the execution of the alternative transaction,” Planet IB said in Saturday’s statement.
QInvest will invest $250 million in the venture, which will exclude EFG-Hermes’ private equity business and its stake in Lebanese commercial bank Credit Libanais, the two companies said last month. The units being transferred into the venture with QInvest were valued at 700.5 million pounds by accounting firm Grant Thornton, EFG-Hermes said May 30.
Saturday’s vote came after EFG-Hermes’ co-chief executive officers were referred to trial in Egypt May 30, charged with illicit gains related to the 2007 sale of El Watany Bank of Egypt. EFG-Hermes has denied the charges, which centered on the lack of disclosure of trading activities and involved seven others including Alaa and Jamal Mubarak, the sons of former president Hosni Mubarak.
Before Sunday, EFG-Hermes shares had advanced 9.6 per cent this year, compared with a 29 per cent gain for the benchmark EGX 30 Index.