The Financial Regulatory Authority (FRA) revealed that Expedition Investments — a company that was established by various investors — submitted a non-binding offer to purchase up to 90% of the shares of the Arab Food Industries Company (Domty) at an initial price of EGP 5 per share.
Among the shareholders of Expedition Investments are Omar Al-Damaty, the Chairperson of Domty’s Board of Directors; Mohamed Al-Damaty, the Managing Director of the company within the alliance of the offeror investors, with minority stakes in the company presenting the offer; and Mohamed Al-Akhdar, a Member of the company’s Board of Directors.
The company appointed the offices of Maatouq Bassiouni and Al-Hennawy as legal advisers for the deal and expressed its wish to start the due diligence process as soon as possible after completing all the legal procedures.
Sources familiar with the deal revealed that Expedition Investments is a company established for the purpose of acquiring Domty and includes a number of shareholders, including foreign investors.
Sources told Daily News Egypt that the investors will inject the necessary funding to acquire the company, pointing out that no financial adviser has been appointed for consultation so far.
Furthermore, regulatory sources indicated that the FRA is currently studying the submitted offer, and a decision is scheduled to be announced within the next few days.
Domty’s share increased by 14% during Sunday’s trading session, recording EGP 4.5 per share, approaching the bid price.
Mohamed Al-Damaty — the Vice Chairperson and Managing Director of Domty — told Daily News Egypt earlier that the expected sales volume for the current year amounts to about EGP 4bn, and the company intends to pump investments estimated at EGP 150m throughout 2022.
He added that the company also intends to pump investments of 50% of the company’s own resources, and 50% of credit facilities from banks, and that this is the company’s usual policy of pumping investments.
Furthermore, Al-Damaty pointed out that the improvement in the margin ratio witnessed during the last period came as a result of changing the selling policy.
Moreover, he said that the company intends to retain profits or distribute a small part during the current year, while distributing about 70% of the profits during 2023, adding that a decision on the matter is still being studied.
He also stressed that the company intends to expand exports during the coming period through the new company established with Dutch Friesland Campina, the fourth largest dairy company in the world.
Domty achieved profits of EGP 72.42m in 2021, down from 2020’s EGP 157.97m, taking into account minority rights.
The company’s sales also rose last year to EGP 3.36bn, compared to EGP 2.99bn in 2020.
The company intends to raise the prices of its products after the rise in the prices of basic commodities to maintain the total margin at 23% for the current year, especially after inflationary pressures and the depreciation of the pound, according to Al-Ahly Pharos Securities Trading’s research.
The research’s findings pointed out that the company plans to add two new bakery lines, which will be financed through a long-term loan, but a rise in interest rates and other increases are expected throughout 2022 and are likely to put net profit under pressure.