CAIRO: Moving forward with their global expansion and profit growth ventures, Sweden’s Electrolux acquired Monday a 52 percent controlling stake in Egypt’s appliance maker Olympic Group.
After meeting with Egypt’s Prime Minister Essam Sharaf along with the president and CEO of Electrolux, Saad Eldin Abdullah Sallam, chairman of Paradise Capital, the parent company of Olympic Group announced that this would be the first foreign direct investment of this size to enter Egypt after the January 25 Revolution.
Each share will cost Electrolux LE 40.6, amounting to LE 2.5 billion in total, while LE 450 million will be sold back to Paradise Capital, so net value will be at LE 2 million, according to Keith McLoughlin, president and CEO of Electrolux.
“Half a billion dollars will be entering the market in Egypt right now as a result of this deal,” said Sallam. “We are proud to be a part of this partnership which will create a brighter future for Egypt.”
McLoughlin said that the point of the merger would give both companies an advantage in the region as Olympic and Electrolux have already been collaborating for over 20 years.
“We know the people in Olympic, we know the management and we’ve built a relationship based on integrity,” said McLoughlin.
Asked about payment, Olympic’s Chief Financial Officer Hossam Mestikawi told Reuters: "Cash, it’s a cash deal, they are acquiring from the market. They’re buying 100 percent of the firm."
McLoughlin added, “We will have a tender offer effective immediately, we’ve already signed the definitive agreement last night but we expect everything to be finalized by the end of this month or first week of August.”
Electrolux plans to expand further on the Olympic name, which is already well known in Egypt and the Middle East and North Africa (MENA) region.
“This is the implementation of profit growth that we plan to begin in emerging markets,” said McLoughlin. “For the people of Egypt, it is a small and humble sign that shows we have confidence in the country and that the road of democracy should be built on transparency and economic expansion.”
Electrolux will be operating from Cairo throughout the region, making Egypt’s headquarters a hub for MENA and eventually Europe.
McLouglin, who has full confidence in the Egyptian market also pointed out that this is the opportune time to invest in Egypt.
“There will be some turbulence in the upcoming period during the drafting of a constitution and the parliament and presidential elections, but nonetheless this is the perfect time,” he added.
Electrolux was first founded in Sweden in 1919. Today, they operate in 60 countries with sales amounting to around $15 to $16 billion.
Their first acquisition in Egypt began with Zanussi in 1984.
Olympic which now owns Ideal Zanussi, has been operating in Egypt for 70 years. The company was the first in Egypt to introduce electric water heaters.
Today, they distribute a wide variety of appliances such as no-frost refrigerators, cookers, and heaters to the Middle East and North Africa Region, as well as to other parts of Africa.
Electrolux said it would consolidate earnings from buying Olympic Group from the third quarter and that it would boost earnings after the first year, Reuters reported.
"We expect that we will begin to consolidate in Q3, so some portion of Q3 financials for Olympic we would hope would be comprehended in our financials," McLoughlin told Reuters.
"We see this being EPS (earnings per share) accretive in year one, after the first full year," he said.
Meanwhile, Paradise Capital said it was ready to receive offers to buy electronics and appliance seller B-Tech and real estate investment firm Namaa, according to Reuters.
"If someone wants Namaa and B-tech, they can proceed to present an offer," Sallam said.
