Arabs, selling orders are weighing down on the Egyptian market, with its index for the most actively traded stocks CASE30 closing 2.2 per cent on the week ending 10 November. The sharp decline in Arab bourses, with both the Saudi and Dubai stock exchanges free falling to their lowest levels in two years last week, have ignited a heated selling spree. But the harm was limited because of strong demand by local and foreign investors. The overall transactions came at LE4.38 billion. In a development related to regulating regional stock markets, representatives of 14 Arab stock exchanges agreed to form a federation of regulatory authorities to help make their markets more efficient and improve regulations. The federation also aims to facilitate the exchange of technical experience among Arab bourses. VODAFONE EGYPT (VFE): Vodafone International, owning 50.01 per cent in VFE, is seeking to increase its stake in VFE to reach 55 per cent through a tender offer of LE100 per share. Telecom Egypt, which last month increased its stake in VFE from 23 per cent to 49 per cent at the same price, agreed to sell Vodafone at a minimum of 3.97 per cent and a maximum of 4.69 per cent of VFE. If shareholders of the free floated shares, representing 0.9 per cent of VFE, decided to sell their holding to Vodafone, VFE would likely be de-listed from the Cairo and Alexandria stock exchanges. Under Egyptian law, VE can already de-list to avoid publicly disclosing information about its operations if its Extraordinary General Assembly Meeting approves the measure. The deal came as part of a strategic partnership announced last week between Vodafone and TE, aiming at increasing cooperation between both parties to jointly develop a range of products and services for the Egyptian market. As part of the partnership plan, the current agreement through which TE provides VFE with international gateway services will be extended until the end of 2007. Cooperation between the two telecom heavyweights will also include VFE's use of TE's outlets for cross promotion, in addition to joint development of services for TE Data, the Internet company affiliated to TE. Additionally, both companies will discuss regional initiatives to sharpen their competitive edge, based on their expertise in fixed-line and mobile communication services. VFE's board of directors is to be restructured to reflect the new shareholder representation. On another positive note for VFE, the company's results for the first half of fiscal year 2006/2007 showed a 60 per cent increase in its net profits to reachLE1.29billion, thanks to a leap in the number of subscribers. VE subscribers increased by 34 per cent during the year ending September, 2006, to reach 7.9 million. Another factor that fed the growth in earnings compared to last year is the fact that with the third mobile licence provided to a new mobile company, VFE as well as its rival MobiNil, were released from paying an annual fee of LE92 million for the 1.8MHz spectrum acquired in January, 2005. AMOUN PHARMACEUTICALS: The Bassily Family Shareholders of 93 per cent of Amoun Pharmaceuticals sold their shares last week to Mercury Egypt for Pharmaceutical Industries, which is acting on behalf of Capital International Private Equity Fund, Citigroup Venture Capital International and Concord International Investments of New York. The sale came at LE47 per share, valuing the deal at almost LE2.8 billion. Moreover, Mercury presented an offer to buy the remaining seven per cent freely floated in CASE and already began receiving selling orders. Tharwat Bassily, Amoun's chairman, recently said that he is selling the company that he founded in 1989 because he wants to retire and none of his children is interested in the pharmaceutical business. Amoun produces international products under license and exports to countries in sub- Saharan Africa, Central Asia and throughout the Middle East. The company reported a 32 per cent increase in its sales to reach LE413.4 million in the first nine months of 2006. Also, net income grew 38 per cent to amount to LE152.4 million for the same period. COMMERCIAL INTERNATIONAL BANK (CIB): The bank posted a 37 per cent increase in its net profits to reach 614.5 million during the nine-month period ending in September, with a notable increase in loans and a retreat in the value of provisions. This is due to the depletion of tax provisions and lower non-performing loans (NPL) provisions. After losing the bid to buy Bank of Alexandria last month, CIB announced two major expansionary steps. Primarily, it signed a memorandum of understanding with investors from Egypt and the UAE to establish a new subsidiary in Algeria that is going to operate under the name CIB Algeria. This came only a few days after it entered an alliance with Chairman of OTH Naguib Sawiris in his personal capacity, Oasis Capital and Dynamic securities to form a new investment company. EASTERN TOBACCO COMPANY (ETC): The net income of Egypt's sole cigarette producer for the first quarter of 2006/2007 increased by 45 per cent to reach LE136.2 million. The increase came on the back of a rise in the sale price of the company's best- selling brand Cleopatra by LE0.25 per pack in June, 2006. Another factor that helped in boosting the revenues is ETC raising its under-license fees for British American Tobacco (BAT) by 10 cents for every 1,000 cigarettes. Accordingly, this has delivered LE59.8 million in revenues. Moreover, the application of the new tax law in mid-2005 boosted Eastern's bottom line. The effective tax rate, ratio of paid taxes to profits, was 21 per cent, down from 26 per cent previously.
