French lender Societe Generale SA (SCGLY, SCGLF) agreed Wednesday to sell the majority stake in its Egyptian subsidiary National Société Générale Bank or NSGB, to Qatar National Bank Group or QNB Group, for about $1.97 billion. The deal, expected to close in the first half of 2013, values the whole of NSGB at about $2.56 billion.
Additionally, QNB group will acquire Société Générale's stakes not already owned by NSGB in some of the local subsidiaries of NSGB. This will take the total deal value to about $2 billion.
The completion of the deal will see the French bank booking a net gain of around 350 million euros, with the positive impact on its Basel III pro forma Core Tier 1 at the end of 2013 estimated to be 30 basis points.
QNB group agreed to buy Société Générale's entire 77.17 percent stake in NSGB following the successful conclusion of the due diligence process and the negotiations with Société Générale.
'The Egyptian financial sector represents a significant growth opportunity with its combination of growth potential, increased future penetration of banking services, young and dynamic population to be served and the core links of Egypt within the Middle East and North Africa," QNB Group's CEO Ali Shareef Al-Emadi said in a statement.
Meanwhile, Societe Generale is accelerating its exit from Egypt amid growing investor nervousness in the country since the mass protests against President Mohammed Morsi. It had confirmed in late August the receipt of an expression of interest from QNB Group related to the potential acquisition.
The offer price of 35.54 Egyptian Pounds per share is 10.7 percent below NSGB's market price. The deal represents the largest acquisition in QNB group's 48-year history, and is a significant milestone in its strategy of international expansion.
Following the receipt of mandatory regulatory approvals including the approval of the Central Bank of Egypt, Societe Generale will tender its shares into a mandatory tender offer to be launched by QNB Group in early 2013 to all shareholders of NSGB.
QNB Group is the largest financial institution in the State of Qatar and in the Middle East and North Africa region. The deal will help it further extend its presence in the Arab world.
The deal is also the largest banking transaction in the Middle East since the financial crisis, and one of the largest cross-border investments in Egypt over the last two years.
QNB said it intends to fund the purchase through its own funds and will remain strongly capitalized after the acquisition with a core tier 1 capital ratio of around 15 percent. The deal is expected to be immediately accretive to QNB Group's earnings in 2013.
National Société Générale Bank was established in Egypt in 1978, and is one of the largest private banks operating in the country. The bank was also named "Best bank in Egypt" for 2012 by Euromoney in June.
The stake sale is part of Société Générale's announced plan to move ahead with its transformation process amid an economic environment that remains turbulent. According to Societe Generale, its transformation strategy initiated in 2010 has continued, with its efforts to reduce risk profile and optimize its business asset portfolio.
Société Générale agreed in August to sell its asset management firm TCW Group, Inc. to its management and private-equity firm Carlyle Group LP (CG). It also agreed in mid-October to sell its 99.1 percent stake in Geniki Bank to Greek lender Piraeus Bank (0MTT.L).
Societe Generale shares closed Wednesday's regular trading session in Paris at 29.52 euros, up 0.27 euros or 0.92% on a volume of 3.30 million shares.
by RTT Staff Writer
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