{"id":32183,"date":"2025-05-14T21:54:14","date_gmt":"2025-05-14T19:54:14","guid":{"rendered":"https:\/\/www.legalmondo.com\/?p=32183"},"modified":"2025-06-04T15:55:01","modified_gmt":"2025-06-04T13:55:01","slug":"mergers-and-acquisitions-egypt-legal-financial-regulatory-insights","status":"publish","type":"post","link":"https:\/\/www.legalmondo.com\/de\/2025\/05\/mergers-and-acquisitions-egypt-legal-financial-regulatory-insights\/","title":{"rendered":"Mergers and Acquisitions in Egypt | Legal, Financial & Regulatory Insights"},"content":{"rendered":"

Summary:<\/strong> Egypt has emerged as one of the most promising M&A destinations in the MENA region, driven by regulatory reforms, macroeconomic stabilisation, and strategic regional partnerships. This first part of our two-part series provides foreign investors with a comprehensive overview of the legal framework, key investment sectors, and the evolving role of international players in Egypt\u2019s M&A landscape. From recent legislative changes to foreign ownership liberalisation and high-profile cross-border deals, this article offers essential guidance for navigating Egypt\u2019s increasingly attractive transaction environment.<\/p><\/blockquote>\n

Egypt\u2019s Position as a M&A Hub<\/h3>\n

In recent years, Egypt has emerged as a leading investment hub in the MENA region, driven by economic reforms, infrastructure development, and a favourable investment climate. Its strategic location, large consumer market, and abundant natural resources have attracted domestic and foreign investors. The Egyptian government has supported this growth by amending laws, introducing new regulations, and streamlining business processes to boost foreign investment. In 2021, Egypt ranked second in M&A attractiveness after the U.S., with a 486% growth to USD 9.9 billion across 233 deals, according to an info graph from the cabinet\u2019s Information and Decision Support Centre (IDSC).<\/p>\n

Key Drivers of M&A Growth<\/h3>\n

Currently, Egypt is more than ready to host foreign investors. As time goes by, the authorities are constantly addressing any newly arising matters that have no governance from a legal standpoint. These regulatory reforms have reflected enormously on the country\u2019s economic and corporate standings and resulted in its recent growth and emerging position of the Egyptian market compared to other relevant jurisdictions in the area, such as KSA and UAE, although it is a relatively smaller market.<\/p>\n

The sectors with the highest growth rates are energy, TMT, healthcare, pharmaceuticals, consumer goods, finance, and banking.<\/p>\n

Mergers Vs. Acquisitions<\/h3>\n

Although the terms merger and acquisition are often used interchangeably in the business world, there are key differences between them, as outlined below.<\/p>\n

A Merger<\/strong> is an agreement where two companies combine to form a new entity, with the assets and liabilities of the seller transferred to the buyer. This process typically results in the dissolution of one company’s legal identity, integrating it into another to create a new legal entity. Mergers generally occur between companies of similar size or market scope, with goals to:<\/p>\n

    \n
  • Gain a larger market share.<\/li>\n
  • Reduce operational costs.<\/li>\n
  • Expand into new regions.<\/li>\n
  • Boost profitability for shareholders after the merger.<\/li>\n<\/ul>\n

    An Acquisition<\/strong> involves one company gaining control over another by acquiring shares, voting rights, or overall management control. Typically, a larger company buys a smaller one, becoming the dominant decision-maker. The acquiring company may:<\/p>\n

      \n
    • Purchase 100% of the target company’s shares, assets, and liabilities<\/li>\n
    • Acquire more than 50% of shares to gain controlling interest without full ownership<\/li>\n<\/ul>\n

      From a legal standpoint, in the context of an acquisition, the acquiring entity purchases a sufficient percentage of shares in the target company, granting it control, with the ownership stake potentially reaching up to 100%.<\/p>\n

      In contrast, a merger results in the complete transfer of assets and liabilities from the merged entity to the acquiring entity, leading to the removal of the merged entity from the commercial registry. However, in an acquisition, the target company remains registered, and its commercial record is not annulled.<\/p>\n

      Mergers, often between small and medium-sized companies, are a strategic move to form a powerful entity with technological and capital advancements. This helps them leverage global competition and achieve goals that they can’t accomplish alone, overcome existing challenges and sometimes even avoid bankruptcy.<\/p>\n

      Egypt As An M&A Destination<\/h3>\n

      Egypt\u2019s control of the Suez Canal<\/strong> positions it as a global trade hub, influencing investments in logistics, infrastructure, and energy. The canal facilitates trade between Europe, Africa, and Asia, enhancing its strategic importance. According to the FDI Report 2020, Egypt replaced South Africa as the second-ranked destination for FDI projects in the Middle East and Africa, experiencing a 60% increase in projects.<\/p>\n

      Egypt\u2019s stability and military strength attract investors seeking to mitigate regional risks, while its integration into Africa\u2019s growing economy and membership in the African Union make it a key hub for M&A activity, linking the Middle East and Africa.<\/p>\n

      The government has implemented a comprehensive economic development strategy aimed at boosting productivity, removing investment and trade barriers, improving governance, and reducing state involvement in the economy. Key initiatives include the expansion of over 6,000 km of new roads, recent upgrades to the electricity network have added approximately 14.8 GW of capacity, bringing Egypt\u2019s total installed capacity to nearly 60 GW., and the signing of trade agreements with major blocs, including the QIZ agreement, EU-EFTA, Africa\u2019s COMESA, and MENA & Gulf GAFTA.<\/p>\n

      Egypt, the most populous country in Africa and the Middle East, offers a large consumer market that attracts numerous international brands. Egypt\u2019s competitive labor market provides skilled, cost-effective workers across sectors such as ICT, financial services, and tourism. With a workforce of nearly 30 million, Egypt has established itself as a regional hub for skilled labor, supported by national programs aimed at training and preparing workers. This combination of a large market and a skilled workforce enhances Egypt\u2019s appeal to global businesses.<\/p>\n

      Overview of M&A activity in Egypt<\/h3>\n

      Since 2021, the number of M&A deals in Egypt has dropped 53% on an annual basis to reach 139 deals in 2023, while their total value fell 62% to US$ 3.5 billion due to geopolitical tensions and macroeconomic challenges. The deals were in the financial services, consumer, healthcare and technology sectors.\u00a0 The largest of these deals was UAE Global’s<\/strong> acquisition of 30% of Eastern Tobacco Company<\/strong> for more than 600 million dollars.<\/p>\n

      M&A deals in the second half of 2023 witnessed a 32% increase in the number of deals to reach 79 deals compared to 60 deals in the first half of 2023, while the total value of these deals increased by 383% from US$ 597 million to US$ 2.8 billion.<\/p>\n

      After a challenging couple of years, the Egyptian M&A landscape appears to be showing resilience, with a 21% year-on-year increase in M&A deals in H1 2024<\/strong>. The rebound signals continued investor interest in Egypt, despite a decline in M&A activity in 2023, largely due to currency instability.<\/p>\n

      The situation now appears to have improved. This has largely been driven by a US$35 billion investment from the UAE in Ras El Hekma<\/strong>, which has enabled key reforms – particularly around the currency – and helped reduce inflation. Additional support from the International Monetary Fund (IMF), the World Bank and the European Union (EU) also helped to avert a potential crisis. The Egyptian Prime Minister has anticipated a substantial influx of tourism upon the project\u2019s completion, estimating that Ras El Hekma is poised to attract 8 million visitors to Egypt. This ambitious development will also see the establishment of an international airport south of the city. Egypt stands to benefit from the operational revenues of this new infrastructure, further boosting its economy.<\/p>\n

      The\u00a0Ras El Hekma mega project<\/strong>\u00a0and the\u00a0State Ownership Policy<\/strong>\u00a0(including IPO initiatives) further highlight Egypt\u2019s commitment to fostering investment-friendly conditions.<\/p>\n

      Most Notable M&A Deals and Transactions<\/h3>\n

      The largest announced deal in Egypt in the first half of 2024<\/strong> was ICON<\/strong>’s acquisition of a 51% stake in seven state-owned hotels in Cairo, Alexandria and Aswan for a total of US$ 800 million, including prominent properties such as M\u00f6venpick Resort Aswan<\/strong> and Marriott Mena House Cairo<\/strong> this transaction was one of the five largest M&A deals in the Middle East in the first half of 2024.<\/p>\n

      Other notable deals in the first half of 2024 included B-Investments Holding’s<\/strong> acquisition of a majority stake in Orascom Financial Holding<\/strong> SAE for US$ 50 million and the acquisition of Yodawy by Ezdehar Mid-Cap Fund II for US$10 million.<\/p>\n

      In June 2024, European Commission President Ursula von der Leyen<\/strong> announced that European companies had signed agreements worth over \u20ac40 billion<\/strong> with Egyptian firms across various sectors, including hydrogen, water management, construction, chemicals, shipping, aviation, and automotive.<\/p>\n

      Additionally, BP <\/strong>has reaffirmed its commitment to Egypt by planning to invest up to US$ 1.5 billion in exploration activities over the next few years, with the possibility of further investments totaling nearly US$ 5 billion, hoping to speed up development and production plans to meet growing demand in the Egyptian energy market and support the country\u2019s efforts to export energy surpluses.<\/p>\n

      On 26 February 2025, Fawry (FWRY.CA) announced EGP 80 million in strategic investments, acquiring 51% of Dirac Systems, 56.6% of Virtual CFO, and 51% of Code Zone, as part of its strategy to expand its „Fawry Business“ suite, offering ERP, financial, accounting, and software development solutions, thus reinforcing its position as a leader in Egypt\u2019s fintech sector and supporting the country\u2019s digital transformation and cashless economy.<\/p>\n

      Sector-Specific M&A Trends<\/h3>\n

      The energy sector<\/strong>, particularly natural gas and renewables has been a key driver of M&A activity. Egypt’s Zohr gas field, one of the largest in the Mediterranean, has attracted significant foreign investment, with companies like Eni and BP leading the charge. Additionally, the government’s push for renewable energy has spurred deals in solar and wind projects, supported by international funding from entities like the European Bank for Reconstruction and Development (EBRD).<\/p>\n

      The healthcare and life sciences<\/strong> sector experienced a 30% increase in deal activity compared to the first half of the year 2023. Egypt accounted for 50% of the total deal volume in the region.<\/p>\n

      Egypt\u2019s Green Hydrogen<\/strong> Strategy has attracted global investors, with over USD 10 billion committed to renewable energy projects in 2024. The government anticipates that this initiative will boost Egypt\u2019s GDP by $18 billion and generate over 100,000 jobs by 2040.<\/p>\n

      Telecom Egypt signed a USD 600 million agreement with Hungary\u2019s 4iG to develop a state-of-the-art fiber optic network<\/strong> across the country.<\/p>\n

      M&A activity is rising in the tech and digital sectors<\/strong> as companies boost their digital capabilities. Egypt is emerging as a key hub for regional M&A deals, aided by its role in the COMESA Free Trade Area, which supports cross-border transactions in MENA and Africa.<\/p>\n

      Foreign Involvement In M&A Transactions In Egypt<\/h3>\n

      Egypt\u2019s M&A landscape is shaped by international investors, with key players from the Gulf Cooperation Council (GCC), Europe, the United States, China, and Russia.<\/p>\n

      Gulf Countries (Saudi Arabia, UAE, Qatar)<\/h3>\n
        \n
      • Alignment with strategic plans like Saudi Arabia\u2019s Vision 2030 and the UAE\u2019s diversification initiatives.<\/li>\n
      • Active investments in real estate, construction, and renewable energy projects.<\/li>\n
      • Abu Dhabi, UAE \u2013 16 December 2021: A consortium led by Aldar Properties (\u201cAldar\u201d) and ADQ has successfully acquired approximately 85.52% of the outstanding share capital of The Sixth of October for Development and Investment S.A.E. (\u201cSODIC\u201d or \u201cthe Company\u201d) (EGX: OCDI.CA). On 14 December 2021, the consortium completed the purchase of 304,628,772 shares, valued at EGP 6,092,575,440. The acquisition is controlled 70% by Aldar and 30% by ADQ.<\/li>\n<\/ul>\n

        European Union and Western Countries (UK, France, Germany)<\/h3>\n
          \n
        • Trade agreements and EU partnerships provide preferential access to markets.<\/li>\n
        • EU\u2019s Green Hydrogen Initiative boosts investment in renewable energy with German and French companies acquiring stakes in local green hydrogen projects.<\/li>\n<\/ul>\n

          United States<\/h3>\n

          The U.S.-Egyptian partnership has made significant contributions to Egypt\u2019s development. Key investments include $129 million to enhance the private sector, education, health services, and government transparency. Since 2011, 21 STEM and 10 vocational technology schools have been established. U.S. universities are exploring branch campuses in Egypt, and $63 million has funded 65 Career Centers across 53 universities to equip students with job skills.<\/p>\n

          Over 30 years, $140 million has supported the preservation of cultural sites like the Sphinx and Abu Simbal. The partnership has also facilitated study abroad opportunities for 1,000 Egyptian students, while 25,000 students are learning English, and over 20,000 Egyptians have participated in exchange programs. Three American Spaces in Egypt reached nearly 37,000 participants in 2023 with programs on civil society, climate change, and economic prosperity.<\/p>\n

          China and The Belt and Road Initiative<\/h3>\n

          Egypt\u2019s Vision 2030 and China\u2019s Belt and Road Initiative are closely aligned, with China playing a pivotal role in driving Egypt’s industrial development. Key financial agreements, including currency swaps and loans, have further solidified the bilateral partnership. Additionally, Egypt is benefiting from support for solar power projects through China\u2019s development banks. In 2023, China exported US$13.3 billion to Egypt, primarily in electronics, machinery, and vehicles, reflecting Egypt\u2019s increasing demand for advanced technology as it modernizes its economy.<\/p>\n

          Russia\u2019s Role in Egypt\u2019s Energy Sector<\/h3>\n

          Russia plays a pivotal role in Egypt\u2019s energy sector, particularly in nuclear power. Projects such as the construction of Egypt\u2019s first nuclear power plant in Dabaa<\/strong> highlight Russia\u2019s long-term economic involvement.<\/p>\n

          Key Laws Governing M&A Transactions<\/h3>\n

          Egypt’s legal framework is mainly a civil law system, derived from the Napoleonic (French) Code, as well as Islamic Sharia. Along with the general provisions outlined in the Civil Code, M&A transactions in Egypt are governed by various specific laws, which vary depending on whether the transaction is public or private as follows:<\/p>\n