Cement takeover bids fall through

THE $3 PER SHARE bid to buy the local cement producer Misr Beni Suef Cement (MBSC) by a consortium of both Egyptian and foreign investors has been withdrawn after only 3.5 per cent of the company's shares were offered, as disagreement over a fair bidding price stalled negotiations.

The consortium, represented by Egypt's biggest investment bank, EFG-Hermes, had earlier this month tendered an offer to buy 100 per cent of the firm or a minimum of 51 per cent of the shares.

MSBC has been in the news for some time as a target of a number of acquisition deals. In late June the Capital Market Authority announced that MBSC had received a bid from a company called the Saudi National Investment Company expressing its interest to acquire 100 per cent of the company's outstanding shares at $4 per share. Apparently the CMA did not verify the validity of the offer before announcing it, and was embarrassed when the offer turned out to be forged. An investor, seeking to push the share price up, fabricated the bid under the name of a ficticious company.

At the beginning of the year, Irish cement producer CRH expressed its interest in buying 100 per cent of MBSC's outstanding shares, a figure it later reduced to only 34 per cent. After CRH failed to submit an offer over the allotted time frame, the original proposal was suspended.

MBSC commenced production activities in January 2003. While half of the company's shares are free floated on the market, Banque Misr holds 20 per cent, with the remained owned by the company's founders. MBSC posted net profits of LE784,000 during the first quarter of the year.

Model industries

SOME 100 factories in Borg Al-Arab city will soon join an international programme aimed at improving their competitiveness as Egypt opens itself to the world market. Funded by around six million euros, the programme will be jointly carried out by the Ministry of Industry, the United Nations Industrial Development Organisation (UNIDO), and the Industry Modernisation Programme (IMP).

The agreement was signed Monday by UNIDO Director General Carlos Magarinos and Slim El-Tlatli, executive director of the Industry Modernisation Centre.

The two year project will tackle various aspects of the enterprises' operations ranging from production, marketing and management to the development of export capacity, as well as educating consultants, specialists and trainers to support the industries. All companies will undergo an individual diagnosis to pinpoint their weaknesses and identify priority areas in need of upgrading.

Companies producing complementary products will be grouped together to enable them to pool their resources and jointly market their output.

Borg Al-Arab city hosts 531 factories, which generally suffer under-utilisation of capacity, irregular quality standards, insufficient access to markets and lack of market knowledge. The criteria according to which the 100 factories will be selected is to be announced in September.

Explaining that the project can not work with all 531 factories of the city, Magarinos, who was in Egypt for the signing of the agreement said that "the idea is to have a model group of companies that will show others how to go about upgrading their facilities."

Free trade debate

AMIDST much controversy, the fifth round of negotiations between Egypt and Turkey was held this week in an attempt to approve a free trade agreement between the two countries.

The Turkish delegations expressed its wish to hasten the application of a free trade area with Egypt during the coming three years. However, the Federation of Egyptian Industries (FEI), in a press release issued this week, argued that a Free Trade Area with Turkey should be a gradual process.

Moreover, the FEI asserted that the products included in a list presented by the FEI to the Ministry of External Trade should be delayed to the last phase of the agreement to minimise any negative impact on these industrial sectors.

The FEI said that before approving the agreement the Egyptian negotiations team should further examine the foreign exchange policy and the customs systems in both countries.

The Turkish commercial attaché in Cairo told reporters that Turkey had already signed similar bilateral agreements with 15 countries.

The aim of an agreement with Egypt is to establish a balance of trade between the two countries and increase foreign-funded investment, he said. The attaché added that a maritime line between Egyptian and Turkish ports was needed as well.

The volume of trade between the two countries declined from $513 million in 2001 to $430 million in 2002.