By Ehab Farouk /Reuters July 4, 2010
CAIRO: A $62 million acquisition by Egypt's Pioneers Holding of investment bank Beltone Financial has been scrapped after the two sides failed to agree on a strategy for the merged firm, the parties said on Sunday.
Under the plan, announced in November and approved by shareholders of both companies, Pioneers would have acquired Beltone in an all-share deal creating an entity with LE 29.2 billion ($5.13 billion) under management.
Pioneers was to have issued 100 million new shares for Beltone, whose owners would have held 17 percent of the combined entity. Beltone CEO Aladdin Saba was to have headed the firm.
Based on the Pioneers share closing price on June 30, the last day it traded before Sunday’s announcement, the deal would have valued Beltone at LE 351 million ($61.6 million), about half the deal's value when it was first announced last year.
Beltone's head of investor relations, Osama Rashad, told Reuters the deal fell through due to "lack of agreement on future strategy for the new entity".
Some Egyptian media had reported disagreements in the make-up of a new board. Pioneers board member Khaled El Tayeb dismissed such talk, saying: "This is completely untrue."
Pioneers has a wide retail distribution network with smaller research and investment banking operations. Analysts had said when the merger was announced that the tie-up would have been complementary, given Beltone's institutional client base.
The merger was initially expected to have been completed around the end of 2009.
Pioneers shares were trading down 2.9 percent at 0859 GMT. The benchmark index, EGX30, was down 1.1 percent.