First Abu Dhabi Bank Evinces Interest To Acquire EFG Hermes

The price of Egyptian Financial Services institution EFG Hermes Holding S.A.E. shares rose by 15.95% after an offer from First Abu Dhabi Bank to acquire the group’s shares, traded at E£18.25 (Egyptian Pounds).

The offer values EFG Hermes at $1.2 billion and represents a 21% premium to EFG Hermes’ closing price of $15.74 on 8 February 2022. The offer price also represents a premium of 32%, 40% and 48% respectively over the three-month, six-month and twelve-month volume-weighted average price.

The total assets of EFG Hermes amounted to $3.2 billion as on 30 September 2021 and It achieved a net profit of $67 million during the first nine months of 2021.

EFG Hermes stock rose by 2.14% at the close of trading on 9 February 2022, to be traded at E£15.84 the highest price per share in more than two years since November 2019.

The Financial Supervisory Authority received a letter on 10 February 2022 from the UAE-based First Abu Dhabi Bank (FAB) announcing the latter’s desire to submit a non-binding purchase offer to acquire a majority percentage of no less than 51% of “EFG Hermes Holding” in compliance with the provisions of Chapter XII of the Executive Regulations of the Capital Market Law 95 of 1992.

Due Diligence Procedures

The company will also start the due diligence procedures at the earliest date possible. FAB offered E£19 per share, a premium of about 21% to where EFG was trading before it was suspended on Wednesday, until the due diligence procedures is done.

The decision to submit the purchase offer or not is subject to the results of the due diligence procedures, as well as fulfilling the necessary procedures and obtaining the relevant internal and administrative approvals from the authorities within Egypt and the UAE.

EFG Hermes Recover

EFG Hermes has recovered to some extent in 2021 along with MENA’s capital markets after the COVID-19 pandemic during 2020.

Their positive recommendations for EFG Hermes stock, whose non-banking financial services were profitable and robust, resulting in 48% of the group’s net profit in Q1 of 2021.

FAB’s non-binding offer represents an attractive liquidity event and a compelling value proposition for EFG Hermes’ shareholders, reflecting the company’s robust fundamentals, and strong future growth prospects.

This potential transaction would represent a significant milestone for FAB, in line with the bank’s long term strategic ambitions to become the reference institution for investment banking in the region. It provides enhanced scale, specialisation, growth levers and revenue synergies, strengthening FAB’s offering and regional presence. 

This transaction will also build on EFG Hermes’ strong investment banking capabilities, track record and reputable brand.

Additional details with regards to the due diligence process or the potential transaction would be provided to the market in due course.