Egypt sells stake in tobacco firm Eastern Co to UAE company (updated)

Eastern

16/11/2023 21:56

(Adds details on the purchase price)
       CAIRO, Nov 16 (Reuters) - Egypt has sold a stake in
tobacco products maker Eastern Co  EAST.CA  in its first foreign
sale of a major state asset since it agreed to a privatisation
programme with the IMF last December. 
    The buyer was the UAE's Global Investment Holding Co.,
Eastern CEO Hani Aman confirmed to Reuters on Thursday. 
    Global Investment bought 30% of Eastern, or 669 million
shares, for 16.40 billion Egyptian pounds ($531.60 million), or
24.51 pounds per share in a transaction executed on the stock
exchange on Thursday. 
        Eastern's shares closed up 0.95% on Thursday at 27.95
pounds.
  
    The buyer also agreed to pay an extra 4.38 pounds per share,
putting the total purchase value at $650 million, the Ministry
of Public Enterprise said in a statement forwarded by EFG
Hermes, which acted as adviser on the transaction. 
        The statement did not say who the additional sum would
be paid to or why that portion of the deal was executed outside
the stock exchange. 
  
        The purchase price was executed at the official exchange
rate of 30.85 pounds to the dollar, the statement said. The
pound was trading on the black market on Thursday at about 50 to
the dollar.  
  
        An additional 2 billion pounds of assets were also taken
out of Eastern Co. and retained by the government holding
company in agreement with the buyer, the statement added. 
  
    The cabinet announced in early September that Global
Investment had agreed to buy the stake for $625 million from
state-owned Holding Company for Chemical Industries, which held
50.95% of Eastern's shares. 
    The sale reduces the government's stake to 20.95% and gives
impetus to Egypt's floundering privatisation programme. 
    The cabinet said in September that as part of the agreement
Global Investment would provide $150 million to buy the tobacco
necessary for production. 
    Egypt promised the International Monetary Fund (IMF) in
December that it would roll back the state's involvement in the
economy and allow private companies a much greater role as part
of a $3 billion, 46-month financial support package.
    Since then, the IMF's first and second reviews of the
Extended Fund Facility, initially scheduled for around March and
September, have yet to take place, partly as a result of Egypt's
slow progress in asset sales.
    A number of sales to foreign investors have been announced
in principle, but until now none had been completed.
 ($1 = 30.8500 Egyptian pounds)

 (Reporting by Patrick Werr and Moamen Saeed Atallah; editing by
Jason Neely and Deepa Babington)
 ((patrick.werr@thomsonreuters.com;))