27 Dec. 2001 - 2 Jan. 2002
Issue No.566
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Al-Ahram Weekly Online 27 Dec. 2001 - 2 Jan. 2002 Issue No.566 |
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Sweet deal gone sour
The acquisition talks between the Egyptian American Bank (EAB) and the UK-based Standard Chartered Bank came to a dramatic end last week. Only a few hours after a statement was released by the Egyptian Stock Exchange announcing that Standard Chartered had called off plans to buy EAB, James Vaughn, managing director of EAB died suddenly, reportedly of natural causes.
The statement, according to Reuters, said that Standard Chartered "has decided not to pursue the acquisition of the Egyptian American Bank," and that the bank's main shareholders no longer planned to sell the bank. Instead, the bank will focus on developing the services it already offers, said the statement.
EAB, which is approximately 40 per cent owned by American Express Bank, and 32 per cent owned by the Bank of Alexandria, has been in talks with Standard Chartered for the past six months. Standard Chartered had offered to buy a majority stake in EAB in August. The negotiations for the acquisition which were suspended in October had resumed late last month. The bank's shareholders had announced in May that they planned to sell up to 100 per cent of their holdings.
source: Efg-Hermes
Standard Chartered spokesman Tim Halford told Reuters in London, "We've done our due diligence. It's a good bank, it's a well-managed bank." However, he said, "There was time pressure on their [EAB's] side to get a deal done, but the difficulty for us is that in the current climate, with continuing uncertainty in the Middle East, we are not wishing to invest in the Middle East," he said.
The exchange rate of the dollar against the pound is also believed to have been one of the factors that caused the deal to fall through. Since negotiations began, the pound has lost LE0.35 against the dollar.
Changes in Standard Chartered's board of directors may have also contributed to cancelling the deal. Mervyn Davies was recently appointed as group chief executive following Rana Talwor's recent resignation from his post as director and group chief executive.
The news took its toll on the bank's shares causing them to close at LE47.27 on Thursday, down by LE2.48 from the previous week.
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