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M&As and IPOs: The only constant is change

It is said that most start ups fail within the first two years, but even the largest and strongest of businesses are regularly growing, merging, disintegrating, devouring each other in the quest for dominance and survival.

Over the past year, the financial crisis and its painful impacts on the economic climate, it was easy to tell the strong from the weak. Many companies decided not to wait for the recovery, creating new alliances and combined strengths to weather the storm.

Here are some of Egypt's most talked about mergers, acquisitions and IPOs of 2009.

Pioneers , Beltone merge
Egyptian companies Pioneers Holding and Beltone Financial joined forces to become the second largest brokerage company in Egypt. The management of the new firm will control an expected LE 29.2 billion.

The timetable was finalized in November and the merge is expected to be completed in early January with the resulting company having 36 offices across the Middle East and another in New York. The companies will maintain their separate management but answer to a shared board.

The management created the merge to take advantage of Pioneers ' retail distribution network and Beltone's product quality.

Actis buys CIB stake
In early July, private equity firm Actis purchased a 9.3 percent stake in Commercial International Bank (CIB) , making it the largest single investor in CIB . In a deal worth $244 million, Actis acquired 50 percent of the stake held by a consortium led by US group Ripplewood Holdings.

On Tuesday, Ripplewood said it sold its remaining 4.7 percent residual stake in CIB through the open market.

Actis specializes in the emerging markets, and the investment in CIB is part of the Actis Emerging Markets 3 fund, which is valued at $2.9 billion.

Travco partners with Air Arabia
UAE-based Air Arabia announced in September plans to launch a budget airline in a joint venture with Egypt's Travco Group . The carrier, with its operations managed by Air Arabia , will make Egypt its third hub following the UAE and Morocco.

The hub is part of Air Arabia 's plan to diversify geographically between its current destinations and gain increased access to Travco Group 's 146 hotel, resort, and cruise locations.

The two companies are hoping their venture will help the company overcome the heightened competition and that the first and largest low-cost carrier in the region, teaming up with the Middle East's largest travel and hospitality group, will help further develop Egypt's travel and tourism sector.

Yahoo buys Maktoob
Showing intent to strengthen its presence in the region, on Aug. 25 Yahoo purchased Maktoob .com, the largest Arabic web portal.

While Yahoo already hosts 20 million users in the region despite having no Arabic content, the purchase represents its first major step in the region. As well as the social network community, Maktoob also offers other facilities including an Arabic-language auction site, and the first Arabic-language search engine.

Yahoo says all products will be co-branded and the purchase will complement their move to offer e-mail in Arabic.

Citadel IPO
Late in the year, Citadel Capital began listing its shares on the Egyptian Stock Exchange. The private equity firm manages $8.3 billion in assets and plans on undertaking a $200 million rights issue after the listing.

With a portfolio of 17 specialized investment companies in the Middle East, it has recently been raising money for two new enterprises, Chairman Ahmed Heikal says.

Showtime, Orbit merge
To the delight of television viewers across the region, Showtime and Orbit have merged to create the MENA region's largest pay-TV operator, and this has saved both companies from a precarious financial situation.

After years of competing, Showtime as the high end provider with the newest Hollywood releases and highest rated shows, and Orbit as the cheaper alternative, the two companies merged and began showing additional channels for free just 24 hours after the announcement on July 12.

In order to better compete with free channels, Showtime first made an unsuccessful bid for rights over Premier League games within the region, and then only days later partnered with Orbit. The combined company will offer 70 exclusive channels of content featuring everything from Arabic programs, to news, sports and Hollywood movies.

CAE buys EHFC
Just this past Monday, Crédit Agricole Egypt acquired 99.9 percent ownership of the Egyptian Housing Finance Company (EHFC) , a deal worth LE 70 million. The bank bought out the shares of IFC (20 percent), OPEC (20 percent) and HDFC (10 percent).

The company will operate as an independent subsidiary of the bank with the same management team and employees.

By Neal Hussein

© Daily News Egypt 2009