1. Preparatory stage:

• Negotiations with the target and/or its key shareholders.
• The bidder approaches the target and/or its key shareholders.
• The target company and/or its key shareholders disclose the potential offer to the FRA and the EGX immediately after commencement of serious negotiations with the bidder either in writing or verbally. The target company and/or its key shareholders will also need to disclose a potential offer to the FRA and the EGX if it receives a notification from the bidder that it intends to announce a public tender offer or the bidder and the target company and/or its key shareholders sign a memorandum of understanding.
• Preparation of the bid by the bidder (study, due diligence, financing and draft information memorandum).
• Bidder to apply for FRA approval with regards to the transaction.
• The bidder will have to make the necessary filings with the FRA to launch the public tender offer within 60 business days from the date the target company informs the FRA and the EGX of the potential tender offer. 

2. Launch of the tender offer:

• The bidder files the tender offer with the FRA. The filing must contain, among other elements, certain information including the objectives of the bidder, the number and description of the securities that are already owned by the bidder in the target company (whether alone or together with related parties), the proposed purchase price as well as the other main terms of the tender offer.
• The filing must be accompanied by an information memorandum prepared by the bidder accredited by the legal and financial advisors. The information memorandum must contain information allowing the shareholders of the target company to take a decision regarding the tender offer, including the following:
  • information on the bidder, its related parties and advisers as well as the names of its board members;
  • the duration of the tender offer and its main terms, including the price;
  • the main aspects of the bidder's plans for the 12 months following the successful completion; and
  • the number of securities of the target company that the bidder already directly or indirectly owns.
• The bidder must represent the accuracy of the information contained in the information memorandum and its advisers must verify the accuracy of such information, including the price valuation.
• A letter from an Egyptian bank confirming the availability of the bidder's funds for the offer must be submitted to the FRA by the bidder.
• The FRA notifies the ECA of the relevant offer if the target company operates in the field of non-banking financial services. If the target company does not operate in the field of non-banking financial services and the applicable anti-trust thresholds under the ECL are triggered, the bidder may need to obtain ECA approval prior to submission of the mandatory tender offer file to the FRA.
• Fair value study issued by an independent financial advisor (registered with the FRA's register pursuant to the financial valuation standards) in relation to the shares of the target company involving (i) swaps or a mixed purchase offer (the study should include a detailed list of the swaps shares); and (ii) shares of the target company that are not among the active shares on the EGX.
• Obtain preliminary approvals from the competent authorities if required.
• Submit average closing prices of the target company for three and six months prior to the filing date of the tender offer with the FRA and prices of tender offers for the same security within the twelve months prior to such date.
• The FRA may request any additional information or documentation that it deems fit.
• Upon accepting the application, the FRA must notify the EGX of the main terms contained in the application and the information memorandum. Upon such notification, the EGX shall post it on its screens. As of that moment, the bid is public.
• Counter tender offer applications may be submitted to the FRA at least five business days before the elapse of the tender offer period. Such counter tender offer application shall not be accepted by the FRA unless (i) the purchase of the securities is for cash, i.e., swap tender offers are not acceptable, (ii) the counter tender offer price is at least 2% higher than the original offer price or (iii) if the counter tender offer contains a material amendment in the tender offer conditions that is for the benefit of the shareholders of the target company.

3. Validity of the tender offer:

• The duration of the tender offer may not be less than 20 business days in cases where the opinion of an independent consultant has been requested and 10 business days in all other cases. In all cases, the duration of the tender offer cannot exceed 30 business days.

4. Minimum targeted number of shares:

• A tender offer may be subject to the acquisition by the offeror of at least 75% of the voting rights of the target company if the acquisition is made for the purposes of a merger, or at least 51% of such voting rights in all other cases. If the FRA grants such an approval and the securities offered for sale are less than the percentage stipulated in the tender offer, the bidder will not be able to implement the transaction unless the FRA approves it.

5. Within 15 business days from the date that the information regarding the application has been posted on the EGX screens, the board of the target company may issue a statement expressing its opinion on the tender offer and clarifying its viability and importance for the target company.

6. The review and approval of the application of the bidder by the FRA should be issued within two business days. No publication of the tender offer may be made without first obtaining such approval. Following receipt of the application, the FRA may request additional information and documents, in which case the two-day period in question shall start as of the date when the FRA receives such additional information and documents.

7. Restrictions during the tender offer:

• During the period from the date the FRA approves the application for the tender offer until the publication of the results of such offer, the board of directors of the target company is prohibited from taking any action which may have a material adverse effect on the tender offer. In particular, the board or any of the managers of the target company may not take any decisions for a capital increase or the issuance of bonds if such decision may render the offer impossible or difficult. The board or any of the managers of the target company is also forbidden from taking any action affecting in a material way the base of the target company, increasing its liabilities or obstructing the development of its activities in the future.

8. Response memorandum by the target's board:

• The board of the target company may issue a statement expressing its opinion on the tender offer Within 15 business days from the date that the information regarding the application has been posted on the EGX screens, If (i) the acquisition is to be made by means of a swap of securities or (ii) the securities of the target company are heavily traded and the tender offer price is less than the average price of the securities in the last six months, the target company shall be obliged to issue such a statement.
• The FRA may require the target company to appoint an independent financial advisor to evaluate the tender offer and provide a report. Such appointment must be approved by a resolution of the Board of Directors, for which voting is limited to independent or expert board members that are not related to the bidder. Such a report may be required by the FRA in the following circumstances:
  • the bidder (or any of its related parties) already owns 20% of the share capital of the target company;
  • the bidder is a board member or in the top management of the target company;
  • the purchase price is in cash or share swaps or a combination of both; or
  • such other cases where the FRA deems that such report is necessary for the protection of the target company's shareholders and the interests of the market and its stability.
• The independent financial advisor's evaluation report must be disclosed, at the latest, five business days prior to the expiry of the validity of the tender offer.

9. The bidder must notify the target company of the tender offer and provide the information memorandum on the same day as approval is received from the FRA and must publish the tender offer within two business days from the date of approval by the FRA. The means of publication shall be in accordance with the rules and regulations set out by the FRA.

10. Tender offer amendment and withdrawal:

• After receiving the FRA's approval, the bidder may still amend the conditions of the tender offer provided that any such amendment is made at least five days before the elapse of the tender offer period and that the amendments in question are for the benefit of the shareholders of the target company. The amendments must be published in the same manner as the tender offer itself and may not result in an extension of the tender offer period unless otherwise approved by the FRA.
• The tender offer may not be withdrawn unless there is a material adverse event and the approval of the head of the FRA has been obtained. The bidder, in such a case, shall not be allowed to submit another tender offer for the period of six months following the date of the withdrawal of the tender offer. Such period is extended to 12 months from the date of withdrawal of tender offer in case of a mandatory tender offer unless otherwise allowed by the FRA based on reasonable grounds.  

11. Execution of the sale orders:

• The shareholders of the target company who wish to sell their securities shall submit their sale orders to a brokerage company during the tender offer period. The shareholders may withdraw their sale orders during the tender offer period. The sale orders shall be executed through the EGX system.
• The results of the tender offer will be published on the EGX at the end of the tender offer period and the offeror will have to execute the transaction within five days at the latest from the date of the publication of the results of the tender offer on the EGX.

12. Tender offer price:

• The price of the tender offer must reflect the fair value of the shares of the target company. The price offered to all shareholders must be the same. However, in order to protect the minority shareholders, the FRA may, subject to its discretion, request that an independent valuation is made to determine the fair value of the shares of the target company (see section  4.2).

13. After the elapse of the tender offer period, the EGX should publish the results on its screen and, when relevant, whether or not the bidder waives the conditions precedent to the bid (within the acceptance period).

14. Undertakings:

• The FRA's current practice is to require the offeror to undertake that it will:
  • comply with Article 8 of the Capital Markets Law concerning disclosure
  • purchase all shares offered
• The template of the information memorandum as prescribed by the FRA requires the bidder to disclose and undertake the following:
  • any intention to restructure the target company or terminate any of the current employment contracts  during the first year following the acquisition; and
  • any intention to dispose of the acquired shares within the first year following the acquisition.

15. Payment of the offered consideration by the bidder within five business days of the result being published by the EGX.