The Egyptian Competition Authority has amended the Merger and Acquisition model to be effective starting September.
Based on the amendment, Article 19 Sub-Article 2 stipulates businesses of over EGP 100m per year should notify the ECA when they acquire new assets, equity, and stocks, or join alliances.
The law also sets a penalty for all parties that violate the required notification.
The ECA set a punishment for failing to notify the authority within 30 days of the transactions of EGP 20,000 – EGP 500,000 fine in Article 22.
This came during the ECA’s meeting on 3 July.
According to ECA, in case of mergers or acquisitions between companies’ subsidiary of the same group, the transaction is considered restructuring and does not fall under the notification stipulation unless control is changed directly or indirectly.
Egypt has ranked the third largest African market in terms of corporate transactions during the first six months (H1) of 2018, the African focused research firm StratLink Ltd said.
The Egyptian market saw mergers and acquisitions, and initial public offering (IPO) deals, worth a total of $1.42bn in H1 2018, according to Kenyan newspaper Business Daily.
In this regard, one of the most important acquisitions that has taken place is the acquisition of AUR Capital on real estate developer Wadi Degla Developments on Wednesday. Those two entities have business volumes of over EGP 100m; however, this acquisition was not subjected to that law, which will enter into force in September.
Moreover, one of the most expected large mergers in the Egyptian market is the merger between Madinet Nasr for Housing and Development (MNHD) and Six of October Development and Investment (SODIC).
MNHD and SODIC are of the largest real estate developers in the Egyptian market with volume of business exceeding EGP 100m.
In April, the board of directors of MNHD announced that it has given approval to start negotiations for a potential merger with or acquisition of SODIC, in an attempt to create one of the largest players in the real estate sector.
Moreover, the discussions with SODIC’s board of directors aims to examine the available options, valuations for both entities, and conducting due diligence.
CEO of MNHD Ahmed El Hitamy told Daily News Egypt in a previous interview that the final form of cooperation with SODIC has not yet been determined.
Nevertheless, El Hitamy revealed that the company prefers to choose the shortest and least expensive way to proceed with the targeted merger with SODIC through stock swaps, because the two companies are listed on the Egyptian Exchange.