CAIRO, (Reuters) – A court has annulled a 2006 deal to sell Egypt’s historic Omar Effendi department store chain to a Saudi investor, the state news agency MENA said on Saturday, after critics long argued it was sold too cheaply.
Omar Effendi, a well-known chain with branches in every big town across Egypt, was founded more than 150 years ago and nationalized in 1957. It was sold to Saudi firm Anwal for 589.5 million Egyptian pounds ($99.19 million) in 2006 as part of a privatization plan.
Because of public familiarity with the brand, the sale by then-President Hosni Mubarak’s government drew greater scrutiny than many other sell-offs. The opposition press had long accused Mubarak’s government of selling it too cheaply.
The court’s cancellation of the Omar Effendi deal followed other rulings to scrap state land sales. In those rulings, issued both before and after Mubarak was ousted on February 11, the state was found to have sold land directly rather than at auction. This led to sales below market prices.
MENA said the investment disputes department of the administrative court ordered the Omar Effendi deal be scrapped. It said the case was raised by Hamdy Fakhrany, an engineer who had also successfully challenged state land deals.
A state commission had earlier advised that the department store contract be canceled because of “several legal violations,” MENA said without giving further details.
The Omar Effendi ruling can be appealed.
The Saudi firm had bought a 90 percent stake. The investment minister at the time of the deal, Mahmoud Mohieldin, said the state would keep 10 percent of the shares “to make sure that the investor fulfils all the clauses of the contract.”
At the time, Anwal reportedly promised to spend 180 million pounds on developing the business and retaining properties deemed of architectural value, including one in Abdel Aziz Street in Cairo and one in central Alexandria.
An Egyptian firm, Arabiyya Lel Estithmaraat, had planned to buy 85 percent of Omar Effendi for 320 million pounds from the Saudi company but scrapped the idea in December saying results of due diligence were unsatisfactory.
Omar Effendi was founded in 1856 under the name Orosdi Back and long dominated the retail sector. It changed hands and acquired its current name in the 1920s.