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Eastern Company confirms reports of potential stake sale: The government could sell up to 15.3% of state-owned tobacco manufacturer Eastern Company after receiving offers from several foreign investors, the EGX-listed firm said in a regulatory filing (pdf) yesterday. Talks are at an early stage and the firm is yet to identify its preferred offer, the statement reads. The company did not disclose the identity of the investors.
ICYMI- The filing came after reports earlier in the week that Philip Morris’ United Tobacco had entered talks with the government to acquire a minority stake in the company.
JTI is reportedly in the running: Japan Tobacco International (JTI) is among the companies in talks with the government to snap up the stake, Asharq Business reported yesterday, citing two unnamed sources it said are familiar with the negotiations. An Emirati state institution is also mulling an acquisition, according to a report in Al Mal back in June.
Gov’t wants to maintain at least a blocking minority: The government’s Chemical Industries Holding Company (CIHC) holds a 50.95% stake in Eastern and wants to maintain control over at least 35.67% of the company, according to figures in yesterday’s disclosure. This would allow it to maintain its position as the company’s single-largest shareholder and would give it a large enough position to have a deciding vote in key matters. Figures show South Africa’s Allan Gray holds 7.2% of Eastern, while the union of employee shareholders owns 5.2%; the remainder is in freefloat. Eastern is a regular dividend payer, traditionally attracting a range of institutional shareholders whose individual shareholdings fall short of the 5% threshold requiring they disclose their ownership.
What’s next: The company will file a disclosure once it has finalized terms with one of the investors, it said.
What’s Eastern worth? CIHC will be looking for a strategic buyer to pay a premium. Eastern’s shares rose 8.5% yesterday to close at EGP 19.80, making it the EGX30’s best performer of the day. That gives the company a market cap of EGP 44.1 bn. CIHC last sold shares in 2019, netting some EGP 1.72 bn and attracting heavy appetite from foreign investors.
