Sidi Kerir Petrochemical Company is considering acquiring all the shares of the Egyptian Ethylene Production Company, Ethydco, using the share exchange mechanism after evaluating the two companies to maximise their market value and increase their production.
Sidi Kerir is affiliated with the Petrochemical Holding Company and already owns about 20% of Ethydco.
Furthermore, Sidi Kerir’s Board of Directors held a meeting on Monday to discuss the prospects of the company’s acquisition of Ethydco through a share swap agreement and contracted with investment bank NI Capital to assess the feasibility of the acquisition.
Prime Securities considers that taking into consideration the market capitalisation of Sidi Kerir and due to the higher production capacity of Ethydco compared to it, the share swap ratio would be between 1.8-2 Sidi Kreier shares for every one Ethydco share.
Daily News Egypt also learned that an independent financial adviser is being contracted to evaluate the two companies and determine the share swap coefficient, explaining that the results of the study will determine whether the company will proceed with the acquisition process or not, pointing out that the matter is scheduled to be decided within a month.
The sources added that the purpose of the acquisition is to increase the production capacity of the company, as well as to maximise the value of the company, which is likely to be one of the investment options for Gulf sovereign funds to attract foreign direct investments to Egypt, refusing to disclose more details.
The Chemical Holding Company owns about 20% of Sidi Kerir Petrochemicals and 19.23% of the Social Insurance Fund for workers in the government sector, while the Social Insurance Fund for workers in the public business sector owns about 12.24%, the National Investment Bank owns about 6.92%, and the same share belongs to Al-Ahly Capital Holding, while both Misr Insurance and Nasser Social Bank hold 2% each.
Sidi Kerir achieved a net profit of EGP 468m during the first half (1H) of this year, compared to 1H 2021’s EGP 283m — an increase of 65.37%.
Revenues also jumped to EGP 3.879bn, compared to EGP 2.670bn.