Wednesday, June 19, 2024
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Global Investments Holding Ltd., a company based in the United Arab Emirates, has acquired a 30% stake in Egypt’s largest tobacco producer, Eastern Company, for $625m. Under the agreement, the Holding Company for Chemical Industries will retain a 20.9% stake in Eastern Company. 

The signing ceremony was attended by Egypt’s Prime Minister, along with the Minister of Finance and the Minister of Public Enterprises Sector. The agreement was signed by Emad Eldeen Mostafa, Executive Managing Director of the Chemical Industries Holding Company, and Sheikha Lubna Al Qasimi, a representative of Global Investments Holding Ltd.

Under the agreement, Global Investments Holding Ltd will acquire 30% of the total shares of Eastern Company for a total of $625m (EGP 19.336bn). The buyer will provide $150m to purchase the necessary tobacco materials for manufacturing. The Minister of Public Enterprise Sector said the deal confirms the government’s determination to expand the ownership base program and encourage direct private investment in various sectors. 

The agreement aligns with the current trends of offering state-owned companies on the Egyptian Exchange (EGX) to expand the ownership base, stimulate trading in the stock exchange, enhance investment opportunities, benefit from the returns of offering shares in development, renovation, and restructuring operations, as well as improving the financial position of companies and achieving better governance.

This strategic partnership contributes to the development of the industry, achieves market stability, and preserves the rights of workers.

Eastern Company Acquisition Bidding War

Earlier, the Egyptian government said it expected to finalize the sale of a stake in Eastern Company, the largest tobacco producer in Egypt, by the first half of 2024.

The Holding Company for Chemical Industries, which owned 50.95% of Eastern Company before the new deal, has received several offers from foreign investors to buy up to 30% of its share in the company. The sources said that negotiations are underway to choose the best offer among them.

The bidders include Japan Tobacco International (JTI), United Tobacco Company, which is majority-owned by Philip Morris International, and an investor from the Arab Gulf region. The sources said that the bids of JTI and United Tobacco Company were around $700m each.

Eastern Company has announced that its sales increased by EGP 1bn to EGP 14.6bn in the third quarter (3Q) of 2022/23, compared to EGP 12.781bn in 3Q 2021/22, a growth rate of 14%.

The company’s total revenues grew to EGP 54.827bn in 3Q 2022/23, compared to EGP 51.466bn in 3Q 2021/22.

The company’s gross profit amounted to EGP 6.862bn in 3Q 2022/23, compared to EGP 5.723bn in 3Q 2021/22, an increase of 20%.

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