SODIC and Palm Hills sign merger contract

The deal will involve SODIC's purchase of 3,070,000 shares representing 100% of Palm Hills' share capital in exchange for 25,369,161 new shares to be issued by SODIC. Following the transaction SODIC's will have a total of 53,282,557 outstanding shares and a market capitalization of approximately EGP 7.5 billion making it the 14th largest listed company on the Cairo & Alexandria Stock Exchange.

This transaction consolidates the assets and advantages of the two companies in a manner which maximizes the new merged company's opportunity to achieve its objective of being a major player in the regional real estate development market.

In addition to SODIC's existing land bank in Sheikh Zayed City and Katameya amounting to a total of approximately 6.7 million square meters (of which 1.75 million square meters are developed as Beverly Hills), SODIC will become the owner of a further 3.74 million square meters in 6th of October City and Katameya as well as 2.1 million square meters on the North Coast bringing the grand total up to approximately 12.54 million square meters.

As part of the transaction SODIC will also acquire the engineering and construction divisions of Palm Hills under the management of Eng. Shehab Mazhar and Eng. Ashraf Abouldahab respectively as well as the other experienced members of the Palm Hills management team which has built considerable goodwill with its customers and partners over the years. This vertical integration allows SODIC to benefit from significantly increased margins as well as more efficient and streamlined operations.

Additional advantages of the transaction include Palm Hills' 10 year tax holiday as well as a number of valuable brand names including 'Palm Hills', 'Shehab Mazhar' and the right of use of the 'Hacienda' brand name in the context of SODIC's new project on the North Coast.

The deal, which is subject to regulatory approval from the Capital Market Authority and SODIC's shareholders, represents a major milestone in the Egyptian corporate landscape marking one of the largest ever consolidations seen in Egypt.

Yasseen Mansour, Chairman of Palm Hills and Vice Chairman of SODIC under the terms of the foregoing transaction expressed his delight with the merger stating: "Palm Hills has achieved great success in the last 10 years in terms of attaining a position of leadership in the Egyptian market as a pre-eminent developer of luxury housing and new communities.

'Our ambitions have grown with our achievements and we are committed to expand this success further in Egypt and a on a regional level. This deal follows closely on the heels of our recent purchase of 70 acres of land from SODIC last month. During the negotiations and conclusion of that deal, we recognized that the two companies shared the same values and outlook and that a marriage would be tremendously beneficial in the context of achieving our objectives and delivering results to our clients and shareholders.'

Maher Maksoud, CEO of SODIC, stated, "While the real estate market in Egypt and the region is flourishing and offering very lucrative opportunities for profit; rising consumer expectations and increasing competition will inhibit all but the strongest and most sophisticated companies from achieving real sustainable success and growth in this sector.

'The decision behind this merger is based on a recognition of these developments and that the complementary assets, management and other advantages of the two companies can be efficiently harnessed together to create a formidable company capable of leadership in Egypt and subsequent growth in the region."

SODIC is one of Egypt's largest real estate developers and is publicly listed on the Cairo and Alexandria Stock Exchange. The Company was formed in 1996 as a public joint stock company under law no. 159 of 1981. Following a corporate restructuring in 2005 and a capital increase of LE.1.2 billion in October 2006, SODIC's number of outstanding shares has been increased from 15,984,000 shares to up to 27,984,000 shares.

The shareholders consist of a diverse group of regional and local individual and institutional investors. EFG-Hermes, the region's largest investment bank, remains the Company's largest shareholder.

Palm Hills is the developer of the prestigious Palm Hills residential compound in 6th of October City and owns strategic lands in Cairo and the North Coast of Egypt.

Following this deal SODIC's total outstanding shares will be further increased to 53,282,557 and its market capitalization will be approximately EGP 7.5 billion.