The Clap
Sidi Kerir (SKPC) could potentially acquire Ethydco, producing a new entity that would dominate the polyethylene market in Egypt with a value of EGP 15 billion.
Background
Sidi Kerir’s BoD was looking to appoint investment bank “NI Capital” to study the potential acquisition of Ethydco through a stock swap.
Claps Class
Stock swaps result in the acquiring company giving shareholders of the target company part of its shares in exchange for a stake in the target company.
Polyethylene is used to manufacture containers, bottles, and fuel tanks.
The Deets
Sources said Sidi Kerir did not have enough cash to carry out the deal in the traditional way due to Ethydco’s significant capital of $675 million.
Why this Matters
The new entity that will result from the acquisition will be characterized by low cost, having a larger market share, and having pricing power over polyethylene in the local or foreign market.
