11 - 17 January 2001
Issue No.516
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Al-Ahram Weekly On-line 11 - 17 January 2001 Issue No.516 |
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Retailers up for sale
THE MINISTERIAL committee for privatisation has decided, once again, to put up for sale to a principal investor the five internal trade companies which own major department stores. First on the block are Omar Effendi and Hannaux. The other companies which had previously been slated for privatisation are the Modern Fashion Company (Benzione, Ades and Rivoli), the Clothing and Consumer Products Company (Sednaoui), the Egyptian Products Sale Company and Cicurel department store.
The privatisation committee, headed by Minister of Public Enterprise Mukhtar Khattab, has announced that ownership of land assets of these companies will be retained by the state. These will be rented on an annual basis to the investors in these outlets. The committee also announced that 90 per cent of the shares in each of these companies will be sold to strategic investors while 10 per cent will be transferred to the workers' unions for these stores.
This is the second time that the internal trade companies were put up for sale, the first being in 1999 when the sale was aborted due to differences over valuation between the Ministry of Public Enterprise and three bidders. At that time, the government, as a compromise, excluded the companies' land assets from the sale transactions. The valuation price made by the Public Enterprise Ministry for Omar Effendi was LE593 million. Without its land assets, the price came down to LE294.8 million.
But the bids came in considerably lower than even the reduced offering prices. A consortium of Egyptian investors, the Industrialists of Egypt, led by businessman Farid Khamis, had at the time offered LE338.2 million to buy a majority stake of 76 per cent in several of these companies. GMC chairman Mohamed Geneidi, sought three of the companies with an offer reported to be LE150 million. The Egyptian Kuwaiti Holding Company, then co-owned by the Kuwaiti El-Kharafi group and the Commercial International Bank (CIB), submitted an LE52 million offer for 76 per cent of Omar Effendi.
This first attempt at selling these department stores also became mired in political controversy. The matter was raised in parliament which subsequently issued a report warning about the potential for the formation of a foreign monopoly in the local consumer products market.
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