Delay In QInvest Deal To Create Overhand On EFG-Hermes Stock: Pharos

Pharos Research commented on the decision of the Egyptian Financial Supervisory Authority (EFSA), to suspend  the joint venture deal between EFG-Hermes (HRHO.CA) and Q-Invest till providing further required information and reconvening Hermes’ shareholders’ EGM so that the deal can be completed.

It is worth noting that EFG-Hermes’ shareholders approved the deal during the EGM which was scheduled on 2 June 2012.

The research house believes that delays in deal execution will create an overhang on Hermes’ stock. This comes despite unfavorable views on deal pricing (Implied deal valuation stands at cc EGP 12.5/share).

As stated above, EFSA’s decision to reject the deal so far comes due to Hermes’ failure to provide necessary disclosures, which is a temporary rejection until the company does so, followed by reconvening another EGM, and then receiving EFSA’s approval or rejection.