Egypt Achieved Gains from the Deal to Sell a Stake in Eastern Company
Engineer Tamer Gad Allah, Chairman of the Board of the Eastern Company, said that the door to acquire shares in the company has been open since the offering of 28.5% of the company’s shares on the Egyptian Stock Exchange for the first time in 1995. Since then, the government's shares have decreased, either through other offerings or capital increases, to reach a stake of 50.9% in the Eastern Company in 2019. This led to its transition from Law No. 203 of 1991 for the Public Business Sector to Law No. 159 of 1981 for Companies.
He added that during the state's repeated offering of its shares, no tobacco company came forward to buy a stake, except for an Emirati company that invested in the last offering in 2019 and managed to obtain 1%. It then raised its stake through the open market to increase its shareholding to 3.29% of Eastern Company's shares.
Gad Allah explained, in an interview with Bloomberg Asharq, that the government demolished the monopoly of the tobacco industry in Egypt by opening up the opportunity to invest in the tobacco manufacturing activity to all foreign and local tobacco companies operating in Egypt through a limited bidding process to grant a new license for cigarette production in Egypt. This allows for the injection of new foreign currency funds into the state treasury. All companies submitted bids to purchase the limited bidding terms booklet in February 2021. The bidding was reopened in December of the same year to allow all invited tobacco companies to submit their technical and financial bids. A company registered in Egypt and owned by Emirati companies and one of the global tobacco companies was selected, and its financial and technical offer was accepted and granted the manufacturing license.
He also confirmed that the only Egyptian partner of the company that obtained the second tobacco manufacturing license is Eastern Company.
The Chairman of the Eastern Company stated that the cigarette market in Egypt is divided into three segments including local segment cigarettes which is consumed by the largest group of smokers with middle and low incomes, medium-segment cigarettes; and high-end cigarettes.