Mergers, Acquisitions and Takeovers Case Study

Sanpaolo: Consolidating its Presence in the Egyptian Market

OR

Abstract:
Viewed as the country’s biggest auction of state assets, the Egyptian Government on October 17, 2006 decided to sell off 80% stake of Bank of Alexandria (BoA) SAE for $1.6 billion at $12.6 per share Following a three-round auction Italian Sanpaolo IMI Bank emerged the winner after it outbid five other contenders comprising of two European lenders and three Arab groups in order to purchase 80% of Egypt’s fourth biggest commercial bank, Bank of Alexandria. The sale of BoA represented the first phase of privatization of the fourth largest Egyptian bank, which would be soon followed by the big three state-owned banks in Egypt. The privatisation of BoA was in tune with the policies undertaken by the Egyptian Government to restructure its banking sector to reduce the public sector stake in the banking arena from 75% to 40%. The transaction had been regarded as part of Sanpaolo’s development strategy to establish its footprint in the emerging markets such as Hungary, Romania, Slovenia, Egypt and Albania with representative offices likely to be established in Serbia, Mediterranean in Tunisia (BIAT) and Morocco. The deal was considered to be a subset of a privatisation programme undertaken to rejuvenate the country’s economic reforms.

Pedagogical Objectives:

• To understand the role of mergers and acquisitions in the growth strategy of the banking companies
• To analyse the benefits and drawbacks of mergers and acquisitions associated with banking companies
• To study the impact of the acquisition on the Egyptian banking sector
• To understand the potential synergies of the acquisition
• To learn the impact of reforms in the Egyptian Banking sector
• To understand the pros and cons of the Egyptian Banking sector reforms.

Keywords : Mergers,Acquisitions,Alliances Case Study;Bank of Alexandria (BOA); Egyptian Bank; Auction; Initial public offering (IPO); Sanpaolo; Italy; American depositary receipt (ADR); Ratings; Egyptian Pound (EGP); Capital; Privatisation; Non-performing loans; Foreign direct investment; Central Bank of Egypt (CBE); Law

Contents : 
Bank of Alexandria (BoA)
Expected Synergy
Organization Structure of the Gruppo Sanpaolo IMI
Historical development of Sanpaolo IMI S.p.A
Ratings assigned to Sanpaolo IMI S.p.A
Earnings Per Share of Bank of Alexandria over two years
Customer Deposits of Bank of Alexandria