E-mail Article
Printer Friendly
Share Article
EFG-Bank Audi merger decision within six weeks
Merger talks between Egypt-based investment bank EFG-Hermes and Lebanon's Bank Audi should conclude within four to six weeks, a senior executive of the Egyptian bank said on Monday.
Hassan Heikal, a joint chief executive officer, said the talks, which have continued since at least March, could go either way - to a merger or to a decision by EFG to sell off its 23 percent stake in the Lebanese bank.
At Bank Audi's market price of $90 a share, the stake has a value of about $680 million, according to data of newswire Reuters.
"Because of the complexity of the transaction in the sense of the different regulatory environments, it's taking longer than expected for us to make an announcement," Heikal told a conference call on his bank's first-half results.
"But hopefully this chapter will come to an end in the next four to six weeks, either way, whether positively or negatively," he added.
Heikal said the stated policy of EFG-Hermes remained to integrate the two banks into a common platform.
But he added: "We are not in the business obviously of merging or buying a commercial bank at three, four or five times book [value] and 20 times earnings... We would be sellers at these valuations."
If the two sides cannot agree on the terms of a merger, EFG-Hermes will then face a choice of retaining its stake in Bank Audi or selling it off, he said.
EFG-Hermes bought its stake at $70 and could expect to sell at above the current market price, he said.
"So I think if the deal were not to happen, we would be faced with one or two alternatives, either we divest from Bank Audi and effectively give the cash to the shareholders, and make an IRR [internal rate of return] of 30 or 35 percent," he added.
"Or we maintain it for another day where maybe the integration of the two organisations becomes more achievable."
Asked about their purchase of a stake in a Kuwait brokerage, EFG-Hermes executives said they did not intend to increase the stake because the bank had already paid a high premium for access to the highly restricted Kuwait brokerage market.
Kuwait Invest Holding Co said on Monday it sold a 50 percent stake in a brokerage unit to EFG-Hermes for 33.4 million dinars ($124.4 million). The unit, Offset Holding KSC, owns 90 percent of Gulf Financial Brokerage Company.
Heikal said the brokerage in Kuwait, the second largest stock market in the Arab world, would contribute significantly to EFG-Hermes' consolidated revenues.
"Our share of the six-month earnings is about $11 million. Annualise that, then you should look at more or less 50 pct of that," he added. "We are hoping this is a platform for ultimately a greater presence in Kuwait." (Writing by Jonathan Wright, editing by Will Waterman)
Quick Links(Residental)
Filter by address:
No Comments