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The Khalil Abdo Group

Khalil Abdo 1929Left Egypt to study at Beirut; 1933-Returned to Port Said to pharmacy business (family)

1946- Wholesale drug business with brother->bought him out; 1956- Opened branch in Alexandria. Found several Abdo companies for surgical equipments, cosmetics, laboratory, industrial and agri chemicals 1960Passed away at 50. Business employed 30 people.

Property division Wealth divided according to Sharia Laws. Wife-12.5 % Mother- 25% Sons (3)- 16 2/3% Daughters(2)- 6.25% Mother died- her share distributed among Khalils brother- 1/4 to each Khalil appointed wife, brother in law and best friend as guardian of property because he didnt have good relations with brothers. According to Sharia Laws brothers would get the inheritance U.N.O. Structure
th

Wife

Khalil Abdo

Daughter 1

Daughter 2

Talal(18) American Wife

Sharif(17) NorwegianEgyptian Wife

Zeid(12) American Wife

Zeina

Leila

Aya

Daughter4

Son

Daughter

Son

Daughter

Relationship Talal and Sharif were close, but Zeid was regarded as little brother. Talal and wife suspected Zeids honesty regarding some financial issues. Death of father kept the brothers together. Talal finished studies and came to Port Said to become CEO of the group and later moved to Cairo with the shifting of the companys HQ. Sharif and Zeid lived with mother at Port Said, but as the family expanded, they also shifted to Cairo.

Business Talal didnt act as CEO, but as a team member. Sharif believed that Talal lacked leadership abilities and he took the business decisions and both brothers came to him for advice. Earlier the business was run as interdependent units and the brothers got along well and managed resources among themselves. But as the business grew, each of them handled separate departments. Business grew. HQ building grew crowded in 1987. Sharif moved out and then Zeid followed. Businesses were divided. Talal- Khalil Abdo Co Ltd, business in Sudan; Sharif- MD of pharmaceutical factory, agri and trading business, operations in Cairo; Zeid- Chairman of pharma factory and acting MD. Talal and Zeids mistrust grew and Sharif mediated. Sharia laws advocate the division of property to be such that if no sons were there, property went to brothers. So, Talal was at a disadvantage as he wont get any of his brothers property. Daughters Talals daughter worked under him and suspected their uncles. According to them the uncles didnt treat them properly as they were women working in a masculine environment. According to Sharif, it wasnt like that. He said that they took the company for granted and didnt have any training in management, lacked interpersonal skills and didnt respect punctuality. Zeina joined after completing college from America in 1987. Brothers had no formal system of reporting, but knew about each others projects. Zeina worked under Talal, but didnt consider uncles judgment on anything. Sharif and Zeid thought she was unprofessional and lacked work ethics. She changed departments too often. AGM in HR, then in PR, then in International trade. In 1988 they started talking about succession policies for the 3G. They began discussing Zeinas responsibilities, but never reached conclusions. Sharif and Zeid didnt want to hurt Talals feelings towards Zeina. 1990, Leila came to business. She also had same problems. Came late, took leaves, never attended board meetings unless she needed cash infusions. Made the GM of Delta Labs(tissue culture lab). It did well technically, but fared poorly in business. Every two years brothers complained to Talal, they discussed policy measures to be adopted, but were never implemented. 1994, Aya joined. By that time Talal also was fed up by daughters behavior. So he wanted Aya to work not under him but under Sharif. But that never happened. Sharif suggested to keep the compensation as same as other employees, but Talal said that family members were more loyal so had to be paid more. Sharif also suggested a single CEO and that family members be monitored by a non-family member. Talal disagreed saying that there was little competition for top jobs in Abdo group and the diverse business allowed family people to acquire top jobs in diff departments without overlap. All three brothers received equal compensation. Abdo senior had asked Sharif to keep the family together. Sharif thought that even though his contribution was high, he didnt receive anything extra or any acknowledgement. 1995, Talal gave 80 % of his shares to his 4 daughters. 1996, Sharif was fed up with Zeinas refusal to comply with his decisions. After Zeina defied Sharif in a cosmetics business decision, Sharif sent a letter to Zeina and HODs explaining

the problem. Talal was furious, Sharif threatened to quit, Zied intervened and they all agreed to begin discussions on planning and 3G rules. It wouldve worked, but Talal went on a trip with his wife and the issue subsided. But the relations b/w families soured. 3G 1997, group employed >600 people and less managers were there. 3G members didnt have good realtions with each other. Cousins suspected Talals daughters. Khalil junior, Sharifs son joined Abdo Groups venture pharma business in Egypt. Even though he was hired by Sharif, but he was accountable to many. After some years, Sharif wanted his son to work outside the groups business as he believed that accountability was effected due to family relations working as subordinates. Sharifs daughter and Zieds two oldest children were deciding whether to work in family business or not. Zieds son wanted to join family business, but others were reluctant and wanted to work independently first. Zied also didnt want them to join business as conflicts earlier had made the company suffer. Sharif was also dissatisfied about the way he and his brothers had handled their business and family transitions.