Investors in Egypt have to weigh the attractions of low costs and a growing consumer market against the prospect of political instability. So it’s a modest victory for the country’s government that the world’s second largest white goods manufacturer has decided the opportunities outweigh the risks. Sweden’s Electrolux is paying up to $480m for a leading Egyptian white goods manufacturer, Olympic Group.
Electrolux announced earlier this week that it will acquire Paradise Capital’s 52-per-cent stake in Olympic, and will then make an obligatory tender offer for the rest of the company. The agreed price per share is $8, representing a 50-per-cent premium on Olympic Group’s prior to the announcement. The total value of the transaction could reach $480m.
Olympic Group, which has a 30-per-cent share of the Egyptian market, already had a distribution and manufacturing partnership with Electrolux which goes back three decades. Analysts say that an acquisition makes sense for Electrolux, allowing it to cut production costs and to tap further into Arab and African markets, with their young populations. Electrolux’s shares rose over 4 per cent on news of the deal.
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