The Orascom Telecom Holding headquarters in the Nile City Towers in Cairo. Recently completed merger and acquisition deals worth a total of $4.25 billion involving Egyptian companies could be at risk — including one involving Orascom Telecom. Image Credit: Bloomberg

Dubai: A total of 52 completed merger and acquisition deals worth $4.25 billion (Dh15.61 billion) that involve Egyptian companies could be at stake for regional buyers and sellers due to the uncertainty stirred by political unrest in Egypt, according to the latest report by Standard & Poor's.

The report found recent merger and acquisition transactions in the last 12 months involving businesses and assets in Egypt that could be affected by the 13-day protests calling for the end of President Hosni Mubarak's 30-year rule.

The largest transaction, valued at $1.2 billion, was an agreement by Princess Holding Group and National Mobile Telecommunications in Kuwait to buy a 50 per cent stake in Orascom Telecom Tunisia from Cairo-based Orascom Telecom Holdings SAE in November 2010.

The report showed some regional transactions involving an Egyptian target company. UAE real estate developer Burooj Properties is an investor in a pending transaction of $57.1 million with Palm Hills Development's Village Garden Katameya project for 425 units.

Deals pending

Egypt is involved in 18 pending merger and acquisition deals announced in the past we months and valued at $1.32 billion. Egyptian asset purchases rank the tenth largest acquisition on the S&P 500 Index, a gauge of the US equities market.

US-based companies are involved in seven completed transactions. The biggest is worth $650 million in cash paid by Texas-based Apache Corp to acquire exploration concessions on East Badr Al Din in Egypt from BP Exploration Delta signed in July 2010.

The protests and government reorganisation in Egypt, which led to financial turbulence, are likely to have a "greater effect" on non-US buyers, sellers, and targets involved in Egypt-related transactions, the report concluded.

"Given the small number of US parties involved, we think the effects of recent events in Egypt are likely to be nominal in the domestic merger and acquisition arena. However, we acknowledge that events in the Middle East are fluid and that the situation is still unfolding," S&P researchers said.

Next move

The buyers' and investors' next move in Egypt will be determined by whether local laws and the business environment will protect investments, Jan Plantagie, Regional Head of the Middle East for S&P, told Gulf News.

"If you want to make an acquisition and there's turmoil in the country, you consider your options and what you'll do. Everybody is watching the situation and how it will unfold," he said. "Every cross-border transaction looks into the legal certainty that investments will be protected."

With the uncertainty of the political situation and the speed of events, investors have to do a bit of guesswork.

The future of merger and acquisition deals depends on what happens next in Egypt's volatile political scene. "No one has an answer at this stage," he said.

The uncertainty is bound to delay pending deals, said David Fisher, Middle East CEO of Grant Thorton, a business advisory firm.

The delay in deals will have a negative impact on businesses because it stops them from using the money to develop other business elsewhere, he said. "It has a knock-on impact on other transactions."

The current situation has to be addressed quickly and with clear certain outcomes, he said.

"A business-friendly democracy is the best outcome for business. A government that has good understanding of the needs of business and the desire to help businesses as a way of developing the economy," he noted. "The most important thing is better regime transparency and better corporate governance, which is absolutely critical going forward."

Cairo-based Citadel Capital, a private equity firm in the Middle East and Africa with $8.6 billion in investments under control, resumed full operation yesterday and is assessing the long- and short-term implications to its operations, it said in a statement.