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Case study

Restoring trust in the Egyptian Stock Exchange by completing one of Egypt’s largest-ever M&A deals

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Supporting Egypt’s largest-ever M&A deal

In 2011, one of the world’s largest telecommunications services operators acquired a major stake in a publicly-listed Egyptian telecommunications company. However, the Egyptian Tax Authority’s assessment of additional retention tax liability launched a series of legal proceedings that spanned without agreement for 7 years. Resolving the dispute would be imperative to reviving international investor sentiment following the suspension of the acquiree's shares the Egyptian Exchange.

Resetting relationships to rebuild trust

To reduce negative sentiment hampering national foreign direct investment promotion efforts, we arranged high-level in-country meetings with key regulatory stakeholders to show commitment to resolving the situation. The meetings reset critical relationships and ultimately resulted in the removal of the Egyptian Exchange share trading suspension order and the approval of the company’s management tender offer.

Learning lessons from previous tax disputes

Understanding how previous tax disputes had been resolved would be central to tabling a workable solution. Our analysis revealed that the Egyptian Government had previously resolved tax disputes through reduced settlements in hard currency. One such dispute was the Ministry of Finance’s charge against a prominent construction firm for evading $2bn in taxes on a subsidiary acquisition. The company ultimately paid $360mn following the reversal of an initial $1bn settlement.

Demonstrating a commitment to investment

With an investment of over $1bn at stake involving a company that made up a significant weighting on the EGX 30, we shaped the tenor of discussions by linking the client’s acquisition to Egypt’s efforts to boost foreign investment. We were able to engage stakeholders from the Investment Disputes Committee, Ministry of Finance, Egyptian Financial Supervisory Authority, and senior advisors to the President by offering commitment to encouraging FDI to shore up foreign currency reserves.


Based on the goodwill and restored trust built by negotiation discussions, the acquirer agreed on a settlement without having to pay penalties and received approval to proceed with its mandatory tender offer to purchase the remaining stake in the acquiree. The acquiree shares were subsequently delisted from the Egypt Exchange and ownership of operating subsidiaries was reorganized to complement the client’s structure and amplify access to liquid global stock markets.