National Paints Holdings (NPH), in late April, increased the price of their mandatory tender offer (MTO), for Pachin, to EGP 39.8 a share. This price increase was in response to several competing bids by Eagle Chemicals.
Shareholders at Pachin, a state owned EGX listed firm, had until the 2nd of May to respond. CIHC and Banque Misr were among the major institutions that offered their shares to Pachin.
The team at Shalakany Law Office was led by Omar Sherif. Associate Omneya Anas, and junior associate Rokaya Goneim brought their expertise in capital market and M&A to the transaction.
Lawyer Monthly spoke with Omar Sherif of Shalakany Law Office and got some additional insight on this transaction.
What role did you and your team play in the process?
In this transaction, our role was to guide the target, as well as its majority shareholder through the Egyptian legal framework for mandatory tender offers.
We were both very excited about this assignment. We represented CIHC a couple of years ago when we made a follow-on bid for the shares of Abu Qir Fertilizers. Our relationship with the client was excellent. We were delighted to work on this deal with our friends at Al Ahly Pharos, who acted as financial advisors for the transaction.
What were the key issues you advised on and what obstacles had you to overcome?
This transaction was made more complex by the fact that it was a competitive public offer, with multiple bidders interested. The challenge was to manage the information flow to the public, and balance the disclosures and information availability from one end against the interests of bidders and market on the opposite.
We also felt it was important that the disclosures made by the target company to the market were accurate and on time. It was important that the advisors work in synergy with the parties involved to react quickly to the high-frequency of competitive bids.
What is the context in which this transaction fits into the Egyptian capital markets?
This transaction is part of the larger context of the Egyptian Government’s ambitious Privatisation Program, which will see the government sell stakes in state-owned businesses over the next 12 months, in order to pull the country out from its financial crisis, and secure much needed foreign currencies.
This transaction is also part of the new state-owned policy that outlines the government’s intention to double the role of the private sector in the economy, to 65%, and to attract $40 billion worth private investment by the year 2026.
The government has taken concrete steps to reduce their involvement in certain economic sectors. This will lead to increased investor confidence and more diversified holdings.