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A new entry in the race for Gulf Capital’s stake in Middle East Glass: Parent firm MENA Glass Holding has submitted a mandatory tender offer to acquire an additional 40.8% — represented in 25.5 mn shares — in EGX-listed bottle maker Middle East Glass (MEG) in a USD 57.8 mn transaction, Egypt’s Financial Regulatory Authority said in a statement (pdf)
Remember: MENA Glass Holding already holds 52.9% of MEG, while Gulf Capital’s 36.9% stake (owned through special purpose vehicle MTM Packaging 2) makes it the second-largest shareholder. IGC Holdings owns 6.3%.
Who’s selling? Gulf Capital is looking to offload its entire stake — represented in 23.1 mn shares — in the company, while OGC rejected the offer.
The offer on the table: MENA Glass has offered to pay USD 2.26 per share — which would put the transaction value at some USD 57.8 mn if the buyer ends up securing the full 40.8% and at some USD 52.2 mn if it only secures Gulf Capital’s stake.
A huge markup: The offer marks a 774% premium to MEG’s average share price of EGP 12.54 a piece over the six months ending on 21 April, when MENA Glass submitted the MTO to the FRA, and values the whole company at almost EGP 6.9 bn, according to our calculations.
The end goal: If it succeeds in securing the full desired stake, the transaction will leave MENA glass with a 93.7% stake in MEG. It would get 87.4% without IGC’s stake.
What’s next? MEG has 19 working days to respond to the offer — which gives it until Monday, 19 August.
Post-acquisition plans: MENA Glass plans to resume and continue the expansion plans determined before the transaction, including plans to enhance production efficiency, carry out required maintenance upgrades, and ramp up exports. The buyer also pledged not to delist the company’s shares from the EGX.
Demand is high for Gulf Capital’s stake, with many investors expressing interest for the stake over the last quarter of 2023, including Africa-focused private equity firm Development Partners International, impact investor Mediterrania Capital Partners, and a number of other unnamed bidders.
Advisors: EFG Hermes will broker the acquisition, while Bahaa Eldin Law Office and MENA Associates will act as the buy side legal advisor. Arqaam Capital is the sell-side advisor.
