Kellogg trumps Abraaj in $125m Bisco Misr bid

By Eliot Beer

- Last updated on GMT

Abraaj withdrew from the bidding process on December 31 - leaving Kellogg to strike the $125m deal
Abraaj withdrew from the bidding process on December 31 - leaving Kellogg to strike the $125m deal
Kellogg has triumphed in its battle to acquire Egyptian snack maker Bisco Misr, following the withdrawal of rival bidder Abraaj Capital at the end of last month.

As of 11 January, when the bidding period closed, shareholders owning 86% of Bisco Misr’s shares had agreed to sell their holdings to US firm Kellogg at a cost of EGP89.96 (US$12.58), for a total cost of US$125m. This was around 20% higher than the initial bid from UAE investment firm Abraaj​, lodged at the start of November 2014.

Exit Abraaj

After several rounds of bidding, Abraaj finally withdrew from the process on 31 December. Its final bid, of EGP 88.09 (US$12.32), came on 24 December, and included a provision for a US$14m employee incentive programme. But when Kellogg increased its bid further, the investment firm bowed out.

Abraaj believes that the employees and various stakeholders of Bisco Misr have built a strong brand and a company with strong future potential. Abraaj wishes Bisco Misr and Kellogg success, and trusts that Kellogg will, following the successful completion of its tender offer, continue to preserve and grow this Egyptian national icon, and invest in the professional development of Bisco Misr’s employees, who are the key pillar of the Company’s past and future success​,” said Abraaj in a statement announcing its withdrawal.

Abraaj believes that the fair, orderly and transparent bid process for Bisco Misr clearly validates the growing investor interest in Egypt. Abraaj is positive on the long-term prospects of the consumer sector specifically, and the investment opportunities in general, in Egypt. We expect to see significant investment activity in the country over the coming months given Egypt’s attractive underlying growth potential and its recent positive economic traction​,” it added.

Following Abraaj’s withdrawal, Kellogg established agreements with most of Bisco Misr’s major shareholders to acquire their holdings, and was in a position to buy 59.9% of the firm’s shares, by 6 January. This exceeded the 51% threshold Kellogg had made a condition of the sale’s completion.

Concerns over bid

Last month, as Abraaj and Kellogg were still in competition, some groups in Egypt raised questions over a possible acquisition by Kellogg. The Egyptian Centre for Integrity and Transparency pointed to the US firm’s dealings with Israel and use of genetically modified products as reasons to be cautious, according to Egyptian media reports.

Some Bisco Misr workers also questioned whether the firm would lay off staff following the acquisition, although a Kellogg representative denied it had any plans for staff cuts. Former head of the Economic Research Division at the National Bank of Egypt, Salwa El-Antary, said the acquisition raised concerns over the sabotage of a national industry, according to Daily News Egypt.

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