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APC submits friendly bid for Pharmakas

Financial Mirror Online
Monday,  January 24, 2005, 14.00

Pharmakas Quarrying (PHA) announced that it has received a bid by Gerik Investments, in association with A. Panayides Contracting Ltd. (APC), Ibiscus Invest Ltd., Alpha Pi Holdings Ltd. and George Pipis and G. Kazanos, seeking to acquire the remaining part of the share capital of the Company not controlled by the associated parties.

PHA currently has an issued share capital of 30.455.340 shares of 10 cent nominal value, of which 56.53% is controlled by APC (30%), Ibiscus (G. Pipis 7%) and others.

The associated parties are now seeking to acquire the remaining 43.47% of the capital of PHA, or 13.238.936 shares in a combined cash and equity swap offer in a deal valued at CYP 2.973.465.

They are offering a cash payment of 9 cent per PHA share for a total value of CYP 1.19 mln plus 3 APC shares for every 10 PHA shares for a value of CYP 1.78 mln . The cash consideration and share exchange ratio were based on PHA’s and APC’s audited accounts book value as at 31 December 2003.

On that day, the book value of PHA stood at 21.89 cent and APC’s

book value stood at 44.66 cent. Based on the above, PHA shareholders will receive 90 cent in cash and 13.4 cent from the book value of the 3 APC shares exchanged for every 10 PHA shares held, while they will give up 21.89 cent in terms of PHA’s book value.

PHA said in an official announcement that the offer price gives a 2.33% premium.

George Pipis, a major shareholder of PHA who is backing the deal told the Financial Mirror that one of the main objectives is to achieve cost synergies, as well as extend the cooperation pact between PHA and APC, who will work together to expand their business.

“Assuming the offer succeeds and all the PHA shares are tendered, then a delisting of PHA from the CSE will give an immediate cost saving of around CYP 70.000 annually,” said Pipis.

Further savings are expected from having one head quarters offices, but the most important aspect is the access that APC will have to the PHA’s saw materials used for the construction business, which will help APC’s current drive to diversify its business away from the major infrastructure projects to the more profitable development and sale of properties.

The fact that the deal gives a 37% premium when considering the most recent share price values trading on the CSE is also seen as positive. Prior to the offer, the shares of PHA were trading around 12c, while those of APC at 24.5c. In view of the 9c cash offer and the equity swap offer, the Financial Mirror calculates a 37.5% premium for PHA shareholders.

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