Cairo: Egypt's Orascom Construction Industries said yesterday it was taking over the fertiliser activities of Abraaj Capital in exchange for cash and shares worth about $1.59 billion.
Shares in Cairo-based OCI surged more than 5.5 per cent on the deal to an all-time high of 637 Egyptian pounds ($116).
OCI will pay $874.5 million in cash and issue to Abraaj about 12.77 million new OCI shares through a capital increase, subject to approval by shareholders, it said in a statement.
OCI chief executive Nassef Sawiris said the addition of Abraaj's fertiliser businesses would help OCI become the world's fifth largest nitrogenous fertiliser producer by 2010.
He said OCI was also looking at some greenfield investments in fertiliser production, because the company sees high growth in demand, both from consumers of food and for fuels such as ethanol.
"Both of these factors will drive fertiliser demand as farmers strive for better yields," he said.
As part of the deal with Abraaj, OCI is assuming $1.1 billion in net debt, the OCI statement added. The capital increase shares will be issued at 607.93 Egyptian pounds a share, minus the upcoming cash dividend which is expected to be 300 pounds per share, it said.
"Fertiliser prices are very high and the cost of gas in Egypt, given the concessions OCI and Abraaj can secure, are very favourable to EBITDA margins," said Tarek Shahin, analyst at Cairo-based investment bank Beltone Financial.
