MCQ shares up nearly 40 percent in 10 days
CAIRO: Misr Cement Qena (MCQ) shares stabilized Thursday just above the LE 71 mark despite the Cairo and Alexandria Stock Exchange s (CASE) announcement it is investigating transactions made over the past week on suspicion of insider trading on the stock market.
The Ministry of Investment (MOI) also announced Wednesday the government is not looking to sell any of its stakes in cement companies in the current time in an apparent response to the offer of Cimpor Inversiones SA to purchase 100 percent of MCQ. Public institutions, including the National Bank of Egypt, National Investment Bank, and Misr Insurance, own 41 percent of MCQ, with the rest of shares divided among private institutions and retail investors.
Cimpor, the Spain-based subsidiary of Portugal s largest cement group, Cimpor Cimento de Portugal, announced earlier in the week it is looking to buy 100 percent of MCQ for LE 67 per share, or a total deal value of LE 2 billion.
Shares of MCQ began a steady climb from just under LE 52 on Feb. 5, almost a full week before Cimpor made its offer, but maintained the normally low trading volumes of the stock. Just days later, MCQ spiked above the LE 60 mark on volumes greater than 100,000 shares per day, both rare occurrences in the past three months.
Case Chairman Maged Shawky said Wednesday large purchase orders made by a MCQ affiliate prior to the Cimpor offer have been rejected by the Case, and others are under investigation for a possible leak of the Cimpor offer.
If executed, the deal would give Cimpor control over MCQ s 1.4 million ton annual production capacity, 3 percent local market share, and the company s corporate tax exemption agreement with the government valid through 2012. In late 2006, MCQ also announced plans to add new production facilities with investments of LE 600 million. The planned upgrades are expected to be operational in late 2008, increasing thecompany s annual capacity by 1.5 million tons.
MOI is yet to comment on the reason s behind the government s unwillingness to sell its stake in MCQ, contradicting the broad lines of its economic policies since 2004. Besides MCQ, the government s only remaining stakes in cement companies are in it s 95 percentownership of the National Cement Company, a 3.2 million ton per year producer.
Still, analysts suggest the government does not want to risk giving the private sector more control over the cement sector after 2006 saw one of the highest rate increases in its prices.
Despite several attempts by the Ministry of Trade and Industry to cap cement prices in the second half of 2006 after significant price increases, companies continued to violate the LE 290 per ton ex-factory limit. Cement prices stood at just over LE 200 per ton in late 2005 before spiking to LE 390 per ton in Q1 2006.