Issue No. 606
Economy
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3 - 9 October 2002 Issue No. 606 Economy |
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| Published in Cairo by AL-AHRAM established in 1875 | Recommend this page | ||
ABC goes Dutch
The markets were buoyed up this week by the sale of Al-Ahram Beverages to the Dutch group Heineken. Sherine Abdel-Razek reports
Al-Ahram Beverages (ABC), Egypt's sole brewery and wine producer, made the headlines this week when Dutch beverages group, Heineken International, bought 98.7 per cent of ABC's equity in a $287 million deal on Sunday. The purchase was at $14 a share. The number of shares sold was well above the 76 per cent minimum which the Dutch firm had been seeking, when it launched its cash bid on 12 September.
Besides being one of the biggest ever in the local stock market, the deal represents an almost 100 per cent capital gain for the shareholders of ABC, which was floated in 1997 at $7 a share. ABC shares closed on 11 September at LE54.09 ($11.66) and has not been traded since then.
The deal comes after 18 months of negotiations and was clinched after Luxor Group, ABC's major shareholder, chose Heineken's offer over three others.
One of the three offers rejected by ABC, was made by Ahmed El-Zayyat, head of the Luxor Group, acting on his own behalf.
The offers came after ABC's management announced that it was looking for a strategic investor to take a majority stake.
According to the terms of the deal, ABC will keep its name, its management and will even sell its existing products under the same brand names.
The company is considered to be one of Egypt's most successful privatisation stories. During the past five years, it has expanded, now employing approximately 4000, compared to 3000 before its divestment. After its acquisition of both Gianaclis Beverages and El Gouna Beverages in the past three years, it has come to enjoy a monopolistic position in the market for, both alcoholic and non- alcoholic, beer and wine.
ABC's share performance over the last nine months source: EFG-Hermes
ABC is a 105-year-old brewery and has production and distribution deals with international heavy-weights like Danish Carlsberg, Irish Guinness and American Royal Crown. It is also one of only nine Egyptian companies traded at the London Stock Exchange in the form of Global Depository Receipts (GDRs).
Despite a decline in tourist numbers, the main consumers of the company's wine production, ABC posted a 23 per cent increase in its pretax profits to LE276 million in 2001.
The acquisition of ABC comes as part of Heineken's plan to increase market share in the Middle East North Africa (MENA) region. Heineken is the world's fourth biggest brewer, operating in 13 African countries. It also recently bought the Lebanese Almaza brewery.
Coming amid a combination of local economic woes and regional political unease, the deal helped boost the local market on Sunday, pushing up the prices of 33 companies.
The regional mobile network operator, Orascom Telecom (OT) has said that Algerian authorities have still not informed the company that they are undertaking an official investigation about the GSM licence it acquired in the north African country.
The company came under fire from the Algerian press recently, who claimed that the Algerian judicial authorities investigation into a GSM licence awarded to OT last year was flawed.
OT said, in a statement to Reuters, "unfortunately, these events have had a substantially adverse effect on the closing of the long-term financing arrangement for Orascom Telecom Algeria SPA (OTA)."
Algeria's second GSM licence was awarded to OT in August 2001, after a bidding process in which OT offered $737 million against the $424 million bid of its competitor, France Telecom.
Algerian newspapers reported last week that the public prosecutor's office ordered "a preliminary investigation into the contract won by Orascom to set up a mobile telephone network in Algeria".
OT has been witnessing a change of fortune for some time. The company has shelved its plan for a capital increase due to setbacks in the equity market.
Another company in the losers camp was Media Production City which posted a 64 per cent drop in net profit, to LE7 million, for the first half of 2002.
The company's finance director, Essam El- Dessouqi, said net profits had been hit by reduced interest income during the first half of the year, as the film and studio entertainment group had used some of its bank deposits to finance the completion of a new studio complex.
The company also said that it was in the final stages of negotiating a LE350 million loan ($75.4 million) to help finance the costs of building a new studio complex.
The money will be used to cover the final costs of the new studio complex, comprising 18 studios, officially opened in June, at the film and entertainment group's complex outside Cairo. The National Bank of Egypt is expected to fund two thirds of the capital and the Bank of Alexandria will provide the balance.
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