Sixth of October for Development and Investment Company S.A.E. (SODIC) has submitted a non-binding offer for the potential cash acquisition of up to 100% of the share capital of Madinet Nasr Housing & Development (MNHD) through a mandatory tender offer in accordance with the applicable laws and regulations.
Headquartered in Cairo and listed on the Egyptian Exchange (EGX), MNHD is an established real estate company that has been operating since 1959. MNHD’s operational focus is in the eastern Cairo area, where its two flagship projects — Taj City and Sarai — are located with a sizeable land bank for expansion opportunities.
The strategic direction of SODIC, as supported by its controlling shareholders — Aldar and ADQ consortium, both of which own 85.5% of the company’s shares since December 2021 — is to grow its market share and continue to expand its development portfolio in Egypt.
The transaction, if completed, will expand SODIC’s footprint in the eastern Cairo market, widen its customer base, and leverage both developers’ strengths to achieve scale and create value through a combined undeveloped land bank of 11m sqm.
SODIC’s non-binding offer to the Board of Directors of MNHD set the purchase price in the range of EGP 3.20 to EGP 3.40 per share, subject to conditions, assumptions and terms as set out in the off.
The mid-point of the range of EGP 3.30 values the company at EGP 6.18bn ($328m), representing a compelling liquidity opportunity for MNHD’s shareholders with a 32% premium to MNHD’s closing price on 4 July 2022 and a premium of 45%, 45%, and 40% to the company’s three-month, six-month, and twelve-month volume weighted average price (VWAP) of EGP 2.28, EGP 2.28, and EGP 2.36 respectively as of the date of the offer.
The mid-point of the range implies a price to book multiple of 1.43x and a price to earnings multiple of 21.4x based on the last twelve months of reported figures for the period that ended on 31 March 2022.
The offer is subject to the satisfactory completion of comprehensive due diligence, applicable regulatory approvals, and several other conditions, including SODIC’s internal corporate approvals and the internal approvals of its controlling shareholders.
Following a satisfactory outcome of the due diligence process, SODIC intends to submit a mandatory tender offer in accordance with applicable laws and regulations.
Hisham Abu Al-Atta — Chairperson of the Board Directors of the Holding Company for Construction, which owns about 15.6% of MNHD, and a Member of MNHD’s Board of Directors — said that there is a meeting of the board of MNHD on Thursday to discuss the acquisition offer submitted by SODIC and to determine a decision regarding the offer.
Salah Katamesh — Member of MNHD’s Board of Directors — added that the company will discuss allowing SODIC to conduct the due diligence process, as well as the possibility of appointing financial and legal advisers to the company in the deal.
CI Capital will play the role of SODIC’s financial adviser in the transaction and Matouk Bassiouni & Hennawy’s office will act as the legal adviser.