The competition to acquire the Paints and Chemical Industries Company (Pachin), one of the subsidiaries of the Chemical Industries Holding Company, has become fiercer after more offers at varying prices emerged.
These offers came through an auction; National Paints made an offer of EGP 34 per stock for 100% of the company earlier this week. It was followed by an offer from Eagle Chemicals at a value of EGP 35 per stock.
With the continued increase in offers at varying values, questions arise about the impact of the market profitability multiplier, which is about 8.26 times, on the evaluation of the company at a profitability multiplier of about 9.93 times, according to Mubasher Information, as well as the economic conditions related to the exchange rate.
Informed sources revealed to Daily News Egypt that Pachin requested to re-update its fair value, especially after the recent devaluation of the Egyptian pound against the dollar, provided that the company completes this update before the end of next week.
Elite Financial Consultancy plays the role of financial advisor to determine the fair value, while Al-Ahly Pharos plays the role of financial advisor to the Chemical Holding Company.
Mustafa Shafie, head of the research sector at Arabeya Online, said that economic conditions undoubtedly affect acquisition offers with every single change in the exchange rate of the pound against the dollar. This makes a new re-evaluation of the companies under acquisition necessary, which means an increase in the value of their assets.
Shafie mentioned that the prices of the acquisition offers submitted by the competing companies are close to the fair value of the share. He also explained that the land owned by the company does not significantly affect the evaluation due to several factors, including the size and its location not being attractive to large real estate developers in the market. The main attraction of the company is its main activity.
Pachin achieved a net profit of EGP 8.28m from the beginning of July until the end of September 2022, compared to EGP 1.58m in profits during the same period of 2021.
The company’s sales rose to EGP 325.25m last September, compared to EGP 213.07m during the same period of 2021.
