UAE’s GIH takes 30 pct stake in Egypt tobacco giant for $625 mln

A United Arab Emirates investment firm bought a 30 percent stake in Egypt’s largest tobacco company for $625 million, in a major boost to the North African nation’s ambitious program to offload state assets and raise sorely-needed foreign currency.

The UAE firm, identified by Egypt’s cabinet as Global Investment Holding Ltd., will also provide Eastern Company with $150 million for the purchase of raw materials for manufacturing, the Egyptian government said in an Arabic-language statement on its Facebook page. It gave no further details about the investor.

Eastern shares climbed sharply in early trade on Egypt’s stock exchange on Monday, rising as much as 15 percent to reach their highest since June 2018 before paring gains to 6 percent.

Based on the sale price of $625 million for a 30 percent stake, the company was valued at just over $2 billion, according to Bloomberg calculations. Cairo-based HC Research said in a note the sale price implies the UAE firm will pay a premium of about 34 percent over Sunday’s closing price, describing the valuation as “good.”

The deal follows an announcement in July that Egypt had reached agreements with investors that included Abu Dhabi wealth fund ADQ to sell stakes in a number of companies for a total of $1.9 billion.

The Egyptian program, which groups more than 30 state-held or state-affiliated companies, is a cornerstone of the country’s efforts to draw in the cash to solve a foreign-exchange crunch and clear the way for a long-delayed review of its $3 billion program with the International Monetary Fund.

Under the terms of the deal, the state-run Chemical Industries Holding Co. will retain a stake of almost 21 percent in Eastern Co. Prior to the sale, it held about a 51 percent stake.

Eastern said earlier o Sunday it was ramping up output of its products by 15 percent to meet demand amid complaints by consumers about routine shortages of some brands.

HC said the $150 million provided by the Emirati firm should help Eastern overcome its current supply bottlenecks.

Related Articles

Back to top button