Egypt has sold a stake in tobacco products maker Eastern Co in its first foreign sale of a major state asset since it agreed to a privatisation programme with the IMF last December.
The buyer was the UAE’s Global Investment Holding Co., Eastern CEO Hani Aman confirmed to Reuters on Thursday.
Global Investment bought 30% of Eastern, or 669 million shares, for 16.40 billion Egyptian pounds ($531.60 million), or 24.51 pounds per share in a transaction executed on the stock exchange on Thursday.
The buyer also agreed to pay an extra 4.38 pounds per share, putting the total purchase value at $650 million, the Ministry of Public Enterprise said in a statement forwarded by EFG Hermes, which acted as adviser on the transaction.
The statement did not say who the additional sum would be paid to or why that portion of the deal was executed outside the stock exchange.
The purchase price was executed at the official exchange rate of 30.85 pounds to the dollar, the statement said. The pound was trading on the black market on Thursday at about 50 to the dollar.
An additional 2 billion pounds of assets were also taken out of Eastern Co. and retained by the government holding company in agreement with the buyer, the statement added.
The cabinet announced in early September that Global Investment had agreed to buy the stake for $625 million from state-owned Holding Company for Chemical Industries, which held 50.95% of Eastern’s shares.
The sale reduces the government’s stake to 20.95% and gives impetus to Egypt’s floundering privatisation programme.
The cabinet said in September that as part of the agreement Global Investment would provide $150 million to buy the tobacco necessary for production.
Egypt promised the International Monetary Fund (IMF) in December that it would roll back the state’s involvement in the economy and allow private companies a much greater role as part of a $3 billion, 46-month financial support package.
Since then, the IMF’s first and second reviews of the Extended Fund Facility, initially scheduled for around March and September, have yet to take place, partly as a result of Egypt’s slow progress in asset sales.
A number of sales to foreign investors have been announced in principle, but until now none had been completed.
