FRA blocks Sagasse’s bid to take full control of Elsewedy Electric: The Financial Regulatory Authority (FRA) rejected an acquisition offer submitted by Abu Dhabi-listed holding company Sagasse Investments to acquire 100% of EGX-listed industrial heavyweight Elsewedy Electric, citing governance, valuation, and minority rights concerns, the regulator said in a statement (pdf). Sagasse wanted to offer EGP 65 per share in cash or via share swap through newly-issued Sagasse stock to buy up all of Elsewedy Electric. The Abu Dhabi-based firm already holds an indirect 18.9% stake in Elsewedy Electric through its subsidiary Electra Investment Holding.

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RATIONALE- The proposed structure violates market fairness and investor protection principles, according to the FRA. The regulator also pointed to the firm’s limited track record and lack of operating assets, saying its shares cannot form a credible valuation basis for a swap offer. The FRA also raised concerns over conflict of interest risks, given Sagasse’ indirect stake and warned that private negotiations with major shareholders could undermine equal treatment of investors. The watchdog said the offer, if executed, could distort trading dynamics while Elsewedy remains listed on the EGX.

ICYMI- Electra buying into the company last year reshaped Elsewedy’s freefloat profile, leading to its removal from theEGX’s main index earlier this year. The drop in trading activity had prompted speculation over a potential delisting, which Elsewedy dismissed, reiterating it has no plans to leave the EGX and remains committed to its listing.

IN OTHER M&A NEWS-

Raya Customer Experience’s (Raya CX) board rejected a mandatory tender offer (MTO) from its parent company Raya Holding, deeming the offer price (EGP 7.50 per share) below fair value, it said in a bourse filing (pdf). The board’s rejection doesn’t block the move outright; shareholders can still choose to tender their shares allowing the acquisition to go through.

REFRESHER- Raya Holding launched the MTO after obtaining FRA approval last month, aiming to raise its ownership in the outsourcing arm to 90% from 60.8%. The offer, open through Sunday, 26 October, is valued at around EGP 330 mn, implying a total valuation of EGP 1.54 bn for Raya CX.

ADVISORS- Al Ahly Pharos is the broker, Zilla Capital is the transaction advisor, and Zaki Hashem & Partners is providing counsel.

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