MCQ transactions still under investigation, shares holding above LE 71 mark
CAIRO: Arab Swiss Engineering Company (Asec) submitted an offer Sunday to acquire 100 percent of Misr Cement Qena (MCQ) at LE 75 per share, or a total deal value of LE 2.25 billion.
The Capital Market Authority (CMA) announced the broad lines of the offer late yesterday and said it was still studying the offer, preventing ASEC from publicizing a formal offer in local newspapers until the authority s permission is obtained.
Asec s offer comes on the heels of last week s offer by Cimpor Inversiones SA to acquire MCQ. Cimpor, the Spain-based subsidiary of Portugal s largest cement group Cimpor Cimento de Portugal, announced it is looking to buy 100 percent of MCQ for LE 67 per share, or a total deal value of LE 2 billion.
At midday trading Sunday, MCQ shares stood unchanged at LE 71.55. The Cairo and Alexandria Stock Exchange (Case) is now investigating transactions made on MCQ shares for possible insider trading after the company s shares rose 40 percent in less than 10 days. Case Chairman Maged Shawky said the Case is particularly concerned with the rise in the share price days before the Cimpor offer was made on low volume, signaling the offer could have been leaked.
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. To the surprise of analysts, the Ministry of Investment issued a statement one day after the Cimpor offer was made, declaring the government has no intentions to sell public company shares in cement producers at the current time.
A Citedel Capital official told The Daily Star Egypt the government s announcement had little effect on the company s decision to submit its offer because the government is not the sole owner of the company.
We have submitted a minimum threshold to be met, he said. If it s not, we have the right to reconsider our offer.
The official declined to specify what the minimum threshold is or other offer specifics beyond what was released by the CMA because the offer has not yet been approved.
Asec is a Citedel Capital subsidiary and one of the country s largest cement producers. In August, a 67 percent share of Asec was acquired by Suez Cement, helping Suez increase its market share to nearly 35 percent.
MCQ is one of the last lucrative partially-public cement producers with 1.7 million tons of annual production capacity. According to its final 2006 figures, the company reported net income up 90 percent to LE 236 million on LE 522 million in revenues.
The company s production captured 3.5 percent local market share and 7.5 percent of the country s total cement exports. MCQ enjoys a corporate tax exemption agreement with the government valid through 2012 and, in late 2006; the company 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 the company s annual capacity by 1.5 million tons.