Monday, August 30, 2010

Egypt's Golden Pyramids scraps South Valley takeover

Shareholders in Golden Pyramids Plaza (GPPL.CA), owner of the City-Stars mega-mall in Cairo, have rejected a share swap with South Valley Cement, putting an end to their planned merger, Golden Pyramids said on Sunday.

"Most shareholders have no desire to continue the procedures of the acquisition via a share swap," a company statement to the stock exchange said.

South Valley (SVCE.CA) approved a 15 billion Egyptian pound ($2.6 billion) capital increase in May to buy Golden Pyramids Plaza, in a bid to expand its focus and diversify its operations outside of cement.

The decision to call off the deal could push South Valley's shares lower when they open on Monday as many investors had been drawn to the company because of the acquisition plan, traders said.

"South Valley's shares will go down because the only thing that was giving the shares any value was the takeover," said Amr El Feky, head of the technical analysis desk at Cairo Capital Securities.

Golden Pyramids, which has investments in real estate and tourism projects and has a fair value estimated at 15 billion pounds, did not say why its shareholders turned down the deal.

South Valley's net profit fell 13 percent to 78.4 million pounds in the first half of 2010.

Its stock fell 1.9 percent to close at 5.30 pounds on Sunday before the announcement, while the benchmark Egyptian share index .EGX30 edged down 0.1 percent.

(Reporting by Dina Zayed for Reuters)