FMCG, Family Businesses Likely to Witness Merger, Acquisition Transactions: Levari Interview
Egypt is expected to achieve approximately 5.3% growth for the next five years, which is well above the 4% average expected for the rest of Africa. For three consecutive years, Egypt tops the list of most attractive African countries to invest in, according to South Africa’s Rand Merchant Bank’s 2020 investment report, due to be released next January.
Can you tell us more about transactions Levari carried out lately?
In 2019, Levari has handled major regional transactions. Some of the most notable transactions were the Investec Asset Management’s acquisition of Spinneys Egypt from the Commercial Bank of Dubai whom we represented.
We are also proud to report that Levari has recently completed the transfer of the intellectual property rights of the novel series Paranormal by Ahmed Khaled Tawfiq to Netflix whom we represented.
We further acted as a legal counsel to the software engineering recruiter Andela as it continues to innovate with its successful pan-African expansion into Egypt, and completed the latest Flat6labs cycle and investment in ten new companies.
We are also very proud to have Marwa Fayed’s Toy Run Association in Cairo come on board and look forward to supporting this great organization and the good that it does for children.
In Dubai, we are very delighted to have Commercial Bank of Dubai come on board as a corporate and litigation clients.
What about Levari’s potential transactions in the near future?
Well, Levari is known for being very secretive about its work and its clients, but I can say that for the upcoming period (until the end of 2019), the firm is about to complete three major acquisition transactions, two joint venture deals, and one major foreign direct investment (FDI) project. We look forward to making the announcements in the new year, but until then, we must respect our clients’ confidentiality.
Are there any new sectors your office is planning to operate in?
In 2020, we plan to expand our work in media and intellectual property, technology (Fintech), capital markets, and cross border arbitration. This may include opening more regional offices, but we reveal more about this later.
How do you see the new Investment Law in Egypt?
We can see that the Ministry of Investment under the auspice of Dr. Sahar Nasr has come a long way in improving the investment legislations in Egypt through a comprehensive dialogue with the private sector, implementation of new legislation and regulations.
The current investment legislation provides a good foundation for further development on the technical aspects of the investment laws and procedure which will come with time as the market gives its feedback and technical requirements. This will aid in securing investments and increase FDIs. Levari’s role will be to ensure that its clients are aware and up to date with the new investment regulations and their benefits.
In your opinion, what are the most prominent sectors in the Egyptian market which could be increasingly eligible for merger or acquisition?
I believe that there are some significant potential acquisition and/or merger transactions in Fast-Moving Consumer Goods (FMCG) and family-owned manufacturing businesses. However, there is great potential in the SME market and great opportunities and growth within this segment.
In your opinion, what are the main legal risks to be found in a merger? Could you tell us Levari’s role in mitigating such risks?
The major legal risks of a merger lie in the fact that when you merge two companies, the full financial and legal liabilities of the two separate companies are now realized in the one newly created company.
The most important aspect before a merger is making sure the legal and financial due diligence is fully and thoroughly undertaken, and that funds are set aside in case of any unforeseen issues.
However, one of the major issues we sometimes see is the difficulties that employees go through in a merger; here the work culture changes, and usually the staff can feel uncomfortable during that period of change.
Nonetheless, our role as lawyers is to make sure that everyone is protected and the transitional period proceeds as smoothly as possible.
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