Citadel and Abraaj end stake sale talks

MENA heavyweights Citadel Capital and Abraaj Capital failed to agree a deal which was expected to result in Egypt-listed Citadel selling a stake to its Dubai-based peer.

Abraaj Capital is no longer exploring the purchase of a stake in Citadel Capital, both groups have confirmed in separate statements.

“This does not preclude Abraaj from exploring such a transaction in the future should performance, deal terms and / or circumstances change,” Abraaj said.

Abraaj had been in exploratory discussions with Citadel for the past two months, widely understood to be over the acquisition by Abraaj of a significant stake in its listed peer.

These discussions were “of an initial nature to evolve a framework, deal terms and mechanics that could be workable for both parties”, Abraaj said. Abraaj declined to comment on the exact reason the talks broke down.

Citadel responded: “The parties did not reach agreement on terms that would — in the view of Citadel and of its advisors, Citigroup — maximise value for all Citadel Capital shareholders equally, and adequately protect the interests of the firm’s stakeholders and co-investors.”

Earlier this month, Citadel appointed Citigroup “to look into all the strategic alternatives available to the firm and to provide guidance on any possible acquisition offers”.

Although the Abraaj deal fell through, Citadel revealed in June that it was in “early stage, verbal talks” with “more than one potential strategic investor regarding the possible sale of shares in Citadel Capital”. This suggests other suitors may still be considering a deal for Citadel, although a spokesman declined to comment on the subject.

Citadel won approval from the Egyptian regulator, the Egyptian Financial Supervisory Authority (EFSA), two weeks ago to hold an extraordinary general meeting to vote on a $175 million rights issue. The EFSA had earlier denied Citadel permission, saying the firm's disclosure was incomplete, according to a spokesman. Since then, the firm has worked with the EFSA to fulfil the necessary criteria. Shareholders will now meet in Cairo on August 3 to vote on the rights issue.

A successful rights issue would not preclude a stake sale, however. A spokesman said: “Like any public company, the board of Citadel Capital, which represents shareholders, has a fiduciary obligation to look at any bona fide offer for the firm. This is irrespective of the successful completion of the rights issue.”