Competition for Pachin acquisition sparks controversy over fair value of its stock

The competition for the acquisition of the Paints and Chemical Industries Company – Pachin began to raise controversy in the money market about the fair value of the company’s share. Despite the importance of the company in the Egyptian market and its high market share in the paints sector, it has a strong land portfolio which may affect its stock price.

National Paints is competing against Eagle Chemicals which increased its offer to about EGP 39 currently, while the offer price submitted by National Paints reached EGP 39.80 after it raised it during the past week. 

Sources close to the deal told Daily News Egypt that the companies are bidding on the price of the land, not the company’s stocks, explaining that the expected fair value should be lower than the current offers.

The sources added that Eagle Chemicals is studying raising the purchase offer price by 20 piasters, bringing the share price to about EGP 40, while Compass Capital is studying the appropriate price to submit a competing purchase offer for the two companies.

The sources confirmed that the main shareholder of the Holding Company for Chemical Industries, which owns about 55% of the company, is waiting for a new offer from Compass Capital.

The companies made offers to acquire 100% of the 24 million shares, with a minimum implementation of 75% of the company’s shares. National Dyes Industries raised the advance purchase price to EGP 39.8 per share, according to the latest amendment, and Eagle Chemicals amended the purchase offer to EGP 39 per share.