The Nation Newspaper

Tag: acquisition

  • Continental Reinsurance awaits SEC’s final approval on acquisition

    Securities and Exchange Commission (SEC), Nigeria’s apex capital market regulator, is considering the propriety of giving its final nod to the ongoing bid by majority core investor in Continental Reinsurance Plc to buy out other minority shareholders.

    Continental Reinsurance Company Secretary Ms Patricia Ifewulu at the weekend confirmed that the reinsurance company had submitted application for the final approval of the scheme for the consummation of the acquisition.

    She said the apex capital market regulator has continued to engage with the reinsurance company as the application undergoes the final approval process.

    “The SEC is still reviewing the transaction file and is engaging with the company in that process. The company expects to receive the final approval in the coming weeks and will thereafter apply to the Federal High Court for the approval of the scheme,” Ifewulu stated in a regulatory filing at the weekend.

    Shareholders on December 20, 2018 at a court-ordered meeting approved a takeover bid launched by the majority core investor in the reinsurance company to buy out retail minority shareholders and turn Continental Reinsurance into a wholly-owned subsidiary.

    The board of Continental Reinsurance had announced that it had received an offer from CRe African Investments Limited (CRe Investments), a major investor in the Nigerian company, to acquire all the outstanding and issued shares of Continental Reinsurance.

    According to the board, CRe Investments was making the offer in order to initiate a much needed restructuring exercise for Continental Reinsurance, with a view to consolidating its operations and repositioning it for enhanced competitiveness in the global insurance market.

    The acquisition is being executed through a Scheme of Arrangement under Section 539 of the Companies & Allied Matters Act Cap C20 Laws of the Federation of Nigeria 2004 and other applicable rules and regulations.

    CRe Investments had offered N2.04 per share for the 10,372,744,314 ordinary shares of 50 kobo each or one ordinary shares of $1 each in the capital of CRe Investments for every 176 ordinary share of 50 kobo each held in Continental Reinsurance.

    However, the scheme consideration was revised upwards from N2.04 to N2.10 per share, with the new price representing 51.08 per cent premium on the share price of Continental Reinsurance as at the close of trading on October 5, 2018 which was the last business day prior to the date on which the proposal was received from CRe African Investments Limited.

     

  • Ex-Lagos Poly Rector canvasses skills acquisition for youths

    FORMER Lagos State Polytechnic Rector Mr Olawunmi Gasper has urged tertiary institutions to help jobless youths  who are travelling by road to Europe to seek greener pastures with the acquisition of skills.

    Speaking with The Nation, Gasper, the pioneer Executive Secretary, Lagos State Technical and Vocational Education Board (LASTVEB), said tertiary institutions could award degrees and certificates in skills.

    Gasper lauded the Federal Government’s integration of entrepreneurship into tertiary institutions’ cirriculum, saying schools could consolidate on this by ensuring that students get the skills that could make them marketable globally.

    Gasper said: “Of serious concern is the exodus of youths crossing the Mediterranean.

    ‘’As a former rector of LASPOTECH, I would have, perhaps, made emigration easier by introducing international certification for young graduates desirous of plying their trade overseas. This will be, in addition to their ND and HND, and with this certification, they can simply approach any embassy of their choice, present the certification and say ‘I want to migrate as a technician’.

    “And since skills are valued overseas, these graduates can then approach embassies and present their skill certification alongside their first degrees.

    “It’s a pity that this is one of the things I would have done and I still regret it.”

    Gasper, an engineer, also lent his voice on the university-polytechnic dichotomy, a development that has resulted in new wave of agitations of upgrading polytechnics and colleges of education to a degree-awarding institutions.

    However, Gasper pitched his tent on the conversion, if anything, to satisfy desires of youths yearning for degrees. Nonetheless, Gasper cautioned that while doing this, the status of the institutions should not be altered.

    He said: “It is common knowledge that every young man and woman would want a university certificate. This might be due to parental pressure or community peer group.

    “If we can discern very well, this agitation for university certification has not changed over the last 45 to 50 years, and which I know is not the way out.

    “So, I’ve come up with a strategy -allow everybody to go to university to acquire any degree of their choice, and then you can present the degrees to your parents, and then follow your dreams.

    “I wished we had a  system which obtains in South Africa, whereby without changing the status of the polytechnic system, we give these youths an opportunity and differentiate the polytechnic and university systems. So, these young men and women can come in, get the ND first which is equivalent to A Level. They can then progress for their BS.C within the polytechnic system because of this certificate thing; and because this HND thing is the real cause of the problem, we could gradually phase it out. This can be done so we don’t short change that  youths desirous of a certificate.

    “The ultimate is the success. It is what you can do which comes after your B.Sc.  If, for instance, you have studied, Woodwork, get certification, belong to relevant professional bodies within that area, and duly licensed, that’s the way out. The more we sensitise and create awareness on the opportunities of a skilled person, the more youths show interest in it.

    ‘’For instance, you see a young girl who studied English, but have a talent for upholstery.  So, after her first degree, allow her take up a programme in furniture making.”

    He continued: ‘’The development is a peculiar Nigerian situation. Nowadays, most of these young men and women graduate at between 19 and 20. In those days, we were almost in our 30s when we graduated from trade centres. So, why don’t we allow them to, as usual, graduate at 21, and then the government creates a platform for one year of specific training in a thousand and one skills. We can develop a curriculum for each of those skills, then give a licence to those coming out of those training which, for instance, states: ‘So so person has been licensed to handle plumbing within the district of Ikeja.

    “We see what happened in developed countries; and we can replicate same here. It has gradually become a norm that if you don’t have a degree, that’s the end of you. Let’s give these opportunities to these young men and women to unleash their talents.

    “Where this money is and where the government will create employment is when we have these avalanche of post-B.Sc. listed. You have given these young boys opportunities and challenged them that they can start and complete their training within a year and then get licensed. You can imagine pockets of training centres that will come up nationwide.

  • Insurance firms face hostile acquisition, mergers over low capitalisation

    More than two-thirds of insurance companies are valued below the minimum capital requirement to operate in the lowest rung of the proposed new insurance capital base, making most insurers susceptible to aggressive mergers and acquisitions.

    Current valuation of insurance companies obtained at the weekend by The Nation showed that some 70 per cent of insurance companies are valued below the N5 billion required to operate as a composite tier- 3 insurance company under the planned minimum capital requirements. Only 15 per cent of insurers meet the N15 billion requirement while 15 per cent meet the N5 billion for the second-tier composite operator.

    While regulators use the book value or shareholders’ fund as a measure of regulatory compliance, investment experts agreed that market value is a major component in any corporate valuation. Market value is usually ahead of book value because of the wealth creation potential and future value accretion of the book value. A reversal poses challenges in the event of capital raising and mergers and acquisition, according to investment pundits.

    Chief Operating Officer, GTI Capital, Mr Kehinde Hassan, said market valuation is one of the criteria for valuation of a company for any purpose of new share issuance or mergers and acquisitions.

    According to him, corporate finance experts use market value, net asset value or book value, peer group analysis and scenario analysis to reasonably ascertain possible valuation for a company. The financial ratios tend to revolve around a range and any value significantly outside the range is usually treated as an outlier and removed in the calculation of the pricing average.

    Hassan said low market valuation might have strong influence on the overall valuation of a company as strategic investors may only at best offer slight premium on market value of a company. In a hard-pressed situation, large investors may demand for market-based value or offer price around the pricing range.

    Managing Director, Sofunix Investment and Communications Limited, Mr. Sola Oni said low valuation is a possible trigger for aggressive mergers and acquisitions as low-capitalised companies may find it difficult to raise required capital in the event of massive capital raising exercise by many companies.

    According to him, market valuation, though not absolutely the exact determination of the value of a company in all cases, is a major indicator of the health of a company and over a period of time, the true reflection of its worth.

    “If a company is struggling to meet shareholders’ expectation, such a company is a target for acquisition. Strategic investors usually look for low valuations and synergies and for a company under pressure of minimum capital requirement, the market valuation may play a big role in the negotiation,” Oni said.

    He noted that one of the immediate expectations from the implementation of the new tier-based capital by the National Insurance Commission (NAICOM) is mergers and acquisitions, which may lead to historic consolidation of the insurance sector.

    Citing the example of the Nigerian banking industry, Oni said consolidation, though somewhat a bitter pill may be the much-needed tonic to boost investors and customers’ confidence in the sector, adding that capitalisation is a major requirement for global competitiveness.

    “Investors’ confidence in the insurance sector is low, so there is the need for a turnaround of the sector. Consolidation may lead to such turnaround. However, the current low valuations also present good opportunities for discerning investors who can see into the future, who know that Nigeria as a growing country cannot exist without a viable insurance sector, to take positions ahead of the repositioning of the sector,” Oni said.

    Most of the insurance companies are trading below their 50 kobo nominal value. Investment experts agreed that boards of insurance companies may find it difficult a decision to offer shares below nominal value.

    Under the new NAICOM’s tier-based minimum solvency capital policy, insurers will be classified into three tiers according to the minimum capital base and risk-bearing capacity. Tier 1 insurance companies are required to have minimum capital base of N9 billion for general insurance and N6 billion for life insurance, implying a composite capital base of N15 billion. Tier 2 companies are divided into two categories, with N4.5 billion minimum capital base for general insurance and N3 billion for life assurance. Thus a composite insurance-general and life insurance, will be required to have minimum capital base of N7.5 billion. Tier 3 companies will continue to operate on the existing minimum capital base of N3 billion for general insurance and N2 billion for life insurance, implying a composite capital base of N5 billion for a composite tier 3 insurance company.

    Under the risk-based capitalisation approach, tier 1 companies will be able to undertake all risks including annuity and high-level special risks such as energy and aviation risks. Tier 2 companies will undertake retail insurance as prescribed under Tier 1, including commercial and industrial risks and group life assurance while tier 3 companies will only be able to write retail insurance only including micro insurance, motor, fire, agriculture, compulsory liability insurances, individual life, health and miscellaneous insurance.

    The Nation recently reported exclusively that insurance companies have launched plans for emergency fund raising at the capital market as consolidation looms in Nigeria’s most populous quoted industry. There are 27 insurance companies quoted on the Nigerian Stock Exchange (NSE).

  • Insurers embracing merger, acquisition, says report

    INsurers are turning to merger and acquisition (M&A) in their search for profit, a report by A. M. Best has shown.

    The report, was made available to The Nation in Lagos by the firm’s Director, Market Development & Communications, Dr. Edem Kuenyehia.

    1. M. Best, a global rating agency, stated that insurers were finding it difficult to meet their targeted returns, no thanks to poor underwriting performance and investment returns.

    It disclosed that the M&A market has been active in recent months, a trend, which A. M. Best expects to continue.

    It cited American International Group, which has announced plans to buy Validus Holdings, andAXA has unveiled its intention to acquire XL Group.

    Also, SoftBank has been contemplating taking a minority stake in Swiss Re. In addition, some groups are set to dispose of Lloyd’s operations, notably Sompo Holdings, which sold Canopius AG, to a private equity consortium and The Hanover, which is exploring a sale of Chaucer.

    Bolt-on deals have included Zurich, entering into an agreement to acquire Australian insurer QBE in Latin America and Qatar Reinsurance Company buying Markerstudy’s Gibraltar-based insurance companies, it added.

    The agency said: “Drivers contributing to the recent merger and acquisition activity include the perceived need to build scale and relevance, particularly in the reinsurance sector, which remains under pressure from alternative capital. The soft market conditions are making it difficult to generate strong underwriting returns, and the low interest rate environment is hindering companies’ ability to obtain acceptable yields from investment portfolios.

    “Smaller operations have typically been sold to peers with a stronger presence in a particular market, with buyers seeking to enhance their profile and performance. Furthermore, where companies have identified potential challenges to the sustainability of existing markets or business models, for example from technology, they are looking to diversify to reduce their exposure to these threats. In particular, changing distribution practices have made companies with either data driven technology or a focus on less commoditised specialty business attractive.

    “Some insurers are taking advantage of relatively inexpensive borrowing to finance deals, while in other cases; M&A represents a means for cash rich buyers to deploy excess capital. A.M. Best notes that private equity backed buyers are especially active as they have excess capital and fierce competition between these participants are driving price multiples higher.”

     

    Post-acquisition strategies

    A.M. Best notes there are various strategies deployed in post-acquisition and that they are related to the original motivation for the deal.

    “For example, when similar businesses merge, the intention tends to be to increase scale and relevance in existing markets; therefore, the focus is on realising expense synergies and economies of scale. There will also be an effort to minimise any loss of business, but at the same time ensure that where there is overlap, exposures remain within tolerance. A.M. Best believes that this type of consolidation can be positive as it tends to enhance the position of the company in the insurance value chain, although there are obvious risks associated with execution.’’

    It continued: “In cases where the business of the acquired entity differs considerably to that underwritten by the buyer, the acquired management team is usually kept in place. This has been evident over the past few years in deals involving large Japanese groups buying London market or Bermudian entities. The acquired entity is also more likely to maintain a significant degree of independence. This can allow the takeover target to retain some of the advantages of being a smaller organisation – for example, it can be nimble and potentially more innovative, while benefiting from parental protection and access to the parent’s often large capital base.

    “Finally, in situations where the acquirer is looking to accelerate growth in a market where it has a small presence, the acquired entity is more likely to retain its own identity and brand motivations and likely patterns in future deal-making

    “A. M. Best expects the drivers and market dynamics behind recent deals to remain and that consolidation will continue, particularly for smaller insurers, as it becomes increasingly difficult to achieve acceptable returns on capital. As retail business and the smaller end of the commercial market become increasingly commoditised, largely due to the increased use of technology, companies that have access to and the ability to underwrite more complex specialty business are proving attractive.

    “Additionally, data and analytical capabilities are becoming more important; therefore, companies that add value here are likely to become takeover targets. Other qualities that make an insurer desirable include strong management teams, diversifying portfolios and associated capital efficiencies, as well as access to business and technology.

    “Buyers will seek to avoid potential unforeseen legacy issues and exposures that are outside their risk appetite. Challenges in the M&A environment are diverse and include overpaying, which could erode shareholder value, as well as execution risk on the integration of staff and systems, potential loss of talent and the alignment of different cultures,” it stated.

     

  • Cross River to partner board in skill acquisition

    Cross River State is to partner Nigeria Board for Technology Incubation (NBTI) to ensure that youths are trained in skills, Information and Communication Technology Commissioner Offu Aya has said.

    Aya, who spoke at the graduation of 58 youths trained by NBTI, said Governor Ben Ayade was keen on youths’ independence.

    He said: “The government is concerned with the engagement and employment of youths because it will help them to get something doing, so that they will not be a distraction and create problems.”

    The commissioner hailed NBTI for grouping the graduate technicians into cooperatives.

    He advised them to be disciplined and abide by the rules of the cooperatives so that they could enjoy benefits from the government.

    Aya assured them that the government will partner them to ensure they succeed.

    NBTI’s Director-General Mohammed Jibrin, represented by the Zonal Director, Southsouth, Mr. Kennedy Eze, hailed the government’s commitment to youth training and empowerment.

    The Calabar Centre Manager of NBTI, Mr. Emmanuel Asuquo, said the training was organised quarterly by the Ministry of Science and Technology in conjunction with Technology Incubation Centre, Calabar.

    He said youths were trained in fabrication of agricultural machines, production of battery chargers and preservation of perishable goods.

  • Navy wives build skills acquisition centre

    Navy wives build skills acquisition centre

    •Officers’ spouses shop for personnel families

    The Naval Officers Wives Association (NOWA) at the weekend unveiled an ultramodern skills acquisition centre built to equip the children of its personnel with self-reliance.

    Also unveiled were blocks of 13 shops, which the association said would be leased out at low cost to spouses of naval personnel to boost their financial standings.

    Hailing NOWA for its philanthropic gestures, the Chief of the Naval Staff (CNS), Vice Admiral Ibok-Ette Ibas, said the association had continuously brought succour to the weary and the needy through innumerable outreach projects and programmes.

    He said: “Its stature in service delivery through expanded opportunities in education and empowerment for self-reliance, therefore, towers impressively for all to behold. The annual ritual of touching the lives of the less privileged in the society during major anniversaries and commemoration further solidifies the imprint of NOWA’s exemplary humanity in our minds.

    “Quite pleasantly, it would seem the organisation is increasingly spurred by each new accomplishment. The community of its beneficiaries and prospective ones could, therefore, feel a genuine sense of hope against the very good prospects and relentlessness of NOWA in changing and re-changing their lots for the better.

    “I invite all in need of the opportunities offered in these projects to quickly embrace them. I charge you to make it count by availing the facilities in a responsible and sustainable manner. We look forward to a feedback of measurable and tangible economic progress from participation in the businesses to be facilitated by these outlets.”

    NOWA’s President Mrs. Theresa Ibas said the projects were completed after several years of hard work, determination and perseverance.

    The NOWA chief acknowledged the contributions of her predecessors, Mrs. Vivian Ezeoba and Mrs. Usman Jibrin, who initiated the ideas during their tenures.

    She noted that the projects would reduce the suffering of naval families.

    Mrs Ibas said: “The idea is for beneficiaries to gain one skill or the other that would reduce financial burden on their parents. We sited the projects in Navy Town, Ojo, because this is where majority of personnel reside.

    “Most of our youths find themselves idle not because they love to be but for lack of means. I sincerely thank Mrs. Vivian Ezeoba for initiating this project.

    “She was passionate about the plight of widows, orphans and the navy family as a whole. She sought ways to alleviate their sufferings and came up with this beautiful idea that has become a reality. This is a milestone in the anal of NOWA.”

    The NOWA president urged naval authorities to send officers with requisite skills to run the centre.

    Aside the projects, The Nation reports that NOWA held its annual Christmas Carol and Nine Lessons, which featured performances from nursery, primary and secondary school pupils, among others.

  • Group trains youths on skills acquisition

    Young Progressives Nigeria Initiatives (YPNI), a nonprofit organisation, at the weekend trained over 500 unemployed youths in Ogun state.

    The event which held at Otunba Dipo Dina Stadium in Ijebu-Ode was in collaboration with the Joint Effort for Advancement of the Nigerian Society (JEANS).

    The training cut across event planning, fashion designing, handcraft, soap making and civic education, among others.

    In his welcome address, the Convener/National Coordinator of YPNI, Mr. Adekunle Osibogun, a legal practitioner, said the training was organised to change the approaches of the young people to nation building and for reorientation of values towards self development.

    Osibogun also spoke about branding and rebranding, trademark, tax management, effective and quality time delivery of jobs, customers’ relations, civic education, record keeping among others.

    The project coordinator of YPNI in Ogun state, Prince George Gbadejo in a chat with newsmen after the training said the organisation has constituted a monitoring team to ensure that the participants effectively makes use of the training they have acquired.

    In an interview with our correspondent, a participant, Mrs. Favour Badmus expressed her appreciation to YPNI for bringing the programme to Ijebu. “I got to know about this NGO in October 2016. Since then, my affiliation with the organisation has been fruitful, productive and rewarding. Professionally, I am into soap making but I enrolled for this program to learn events planning and decoration so as to diversify. Today, I return all glory to God and to the leaders of YPNI for what they have been doing to ameliorate the suffering of the people in this area through capacity development.”

    Another beneficiary, Elizabeth Ogbodiye who enrolled in fashion designing said she decided to partake in the programme to build herself professionally before going to university. “Today, I want to say that I am far better than my contemporaries whom we passed out from secondary school together.”

  • Centre convenes first national workshop on skill acquisition

    The International Centre for Sustainable Development in Nigeria (ICSDN) is organising a two-day national workshop on July 20.

    ICSDN was said to have been moved by the current economic challenges in the country to organise the workshop.

     

    The workshop will brainstorm on the economic future of the country as it concerns sustainable human development on the crest of skill acquisition.

    The theme of the workshop is: Skill Acquisition and Empowerment Programmes: A Pathway for Exiting Economic Recession.

    The workshop, said to be the first of its kind in Africa, according to its organisers, will focus on the need for the Federal Government to redirect its energy to the growth and development of youths for better productivity.

    A statement in Abuja by ICSDN’S Secretary General, Mr Pureheart Loveday, noted that the publishers of the Handbook of Skill Acquisition Training and Empowerment Programmes will partner stakeholders, particularly all tiers of government, to ensure that renewed efforts at building a stronger and more economically reliable nation was imbibed by participants at the workshop.

    It said the workshop’s “specific goal” includes: collaborating with all tiers of government, mobilise the private sector, civil society organisations (CSOs) and the public to “support Federal Government’s Change Agenda and its pragmatic efforts towards exiting Nigeria from the present economic recession, using the platforms of skill acquisition training and empowerments”.

    The statement added that participants will brainstorm and fashion out ways and strategies that stakeholders can use to fast-track Nigeria’s exit from the current socio-economic recession into a new era of self-reliant economy.

    They will craft out quick wins, medium and long-term modalities that can facilitate massive job creation and tangible citizens’ empowerment.

    The statement added: “The workshop will create awareness on the benefits of incorporating vocational and technical education into the conventional academic curriculums that will promote individual self-sufficiency, micro income generation and multiple job opportunities for graduates of such tertiary institutions after graduation.

    “To work how existing government funded institutions and establishments can be used to lift artisanal outfits and artisans for optimal productivities.”

    Other objectives of the gathering are: “To underscore how the incorporation of entrepreneurship skills, soft and life skills can be used to add value to the Nigerian academic curriculums; fashion out novel ways that properly organised enskillment programmes can be utilise to unlock the creative vocational potentials of tertiary institution graduates;

    “To develop multiplicity of readily implementable platforms which state governments can use to expeditiously empower their citizenry/residents; produce schemes aimed at standardising government and public sector stakeholder’s artisanal training outfits’ capacities and facilities;

    “To develop implementable strategies aimed at rehabilitation and integration of sub-state groups and radicalised individuals and to also fashion out specific strategies that can fast tract Nigeria’s efforts to exit her present economic recession.”

    The target audience of the workshop includes stakeholders in the Nigerian project, who are not fewer than 500 citizens across all levels of government, corporate organisations, heads of tertiary institutions, the T. Y. Danjuma Foundation, management of Niger Delta Development Commission (NDDC) and the public.

    The workshop expects ministries, corporations, the military, the police, senior government functionaries and heads of foreign mission to participate.

  • Shareholders eye 129% capital gain on Mobil-Nipco’s $301m acquisition deal

    Minority shareholders in Mobil Oil Nigeria Plc could receive more than a double of their current valuations if they decide to take advantage of the ongoing acquisition deal between divesting ExxonMobil Oil Corporation and Nipco Plc.

    Nipco had agreed to pay $301 million for the acquisition of ExxonMobil Oil Corporation’s 60 per cent majority equity stake in Mobil Oil Nigeria Plc. The total consideration of $301 million, which is subject to price adjustments for dividends and other factors, is equivalent to N91.88 billion at current official exchange rate of N305.25 per Dollar.

    Under the deal, ExxonMobil will sell its majority equity stake of 60 per cent to Nipco Investments Limited; a wholly-owned subsidiary of Nipco. ExxonMobil will transfer its total shareholding of 216.36 million ordinary shares of 50 kobo each to Nipco Investments Limited for the consideration of $301 million.

    The gross transaction value implies a valuation of about N425 per share, 128.5 per cent above Mobil Oil Nigeria’s share price of N186 on the announcement date for the deal and 51.8 per cent above Mobil Oil Nigeria’s current share price of N280 per share at the Nigerian Stock Exchange (NSE).

    Under the extant laws at the capital market, Nipco will be required to make offer similar to the ExxonMobil Oil Corporation’s to the minority shareholders of Mobil Oil Nigeria Plc.

    The acquisition, which has already been filed with the Securities and Exchange Commission (SEC) for a “no objection” clearance, is expected to trigger the mandatory tender offer (MTO) provision of the Section 131 of the Investment and Securities Act (ISA) and Rule 445 of SEC, which make it mandatory for any institution or person that acquires at least 30 per cent of a company to make an MTO to other minority shareholders.

    Lafarge Africa Plc, which acquired majority shares in Ashaka Cement Plc, made similar MTO to minority shareholders of Ashaka Cement.

    Mobil Oil Nigeria’s share price remained unchanged at N280 per share at the NSE yesterday as oil and gas stocks continued to lead the downtrend at the Exchange. Seplat Petroleum Development Company led the losers with a loss of N19.50 to close at N370.50. Forte Oil followed with a loss of N9.22 to close at N85.47 while Oando dropped by 21 kobo to close at N4.20 per share. The sectoral index, the NSE Oil and Gas Index declined by 3.7 per cent, significantly higher than the average decline of 0.46 per cent recorded by the general benchmark index.

    The All Share Index (ASI), NSE’s general benchmark index, declined from its opening index of 26,540.87 points to close at 26,418.11 points. Aggregate market value of all quoted equities on the Exchange also dropped by N42 billion from N9.132 trillion to close at N9.090 trillion.

  • Nipco shareholders okay guaranty for $301m Mobil acquisition

    Nipco shareholders okay guaranty for $301m Mobil acquisition

    Shareholders of Nipco PLC have authorised the Board of Directors to stand as a surety and guarantor for the acquisition of 60 per cent majority equity stake in Mobil Oil Nigeria by Nipco Investments Limited, a wholly owned subsidiary of Nipco Plc.

    At the extraordinary general meeting, shareholders praised the acquisition and approved all resolutions tabled before the meeting.

    Nipco had agreed to pay $301 million for the acquisition of ExxonMobil Oil Corporation’s 60 per cent majority equity stake in Mobil Oil Nigeria Plc. The total consideration of $301 million, which is subject to price adjustments for dividends and other factors, is equivalent to N91.88 billion at current official exchange rate of N305.25 per Dollar.

    Under the deal, ExxonMobil will sell its majority equity stake of 60 per cent to Nipco Investments Limited; a wholly-owned subsidiary of Nipco. ExxonMobil will transfer its total shareholding of 216.36 million ordinary shares of 50 kobo each to Nipco Investments Limited for the consideration of $301 million.

    At the meeting, shareholders authorised the board to stand as surety and guarantor for Nipco Investments Limited and also approved the guaranty dated September 26, 2016 given by Nipco for the benefit of ExxonMobil Corporation, USA in connection with the acquisition by Nipco Investments Limited.

    A shareholder, Alhaji Sanni Yau said the acquisition was a demonstration of the capacity of Nipco and its commitments to the Nigerian economy.

    According to him, the fact that Nipco had in the last 12 years focused exclusively on the downstream sector will give it necessary confidence and wherewithal to effectively reposition Mobil Oil Nigeria as an industry leader within the shortest possible time.

    He noted that the confidence reposed in Nipco to put Mobil Oil back as an industry has started to manifest, citing the share price appreciation of more than 55 per cent since the official announcement of the deal by Mobil Oil Nigeria at the Nigerian Stock Exchange (NSE).

    He expressed confidence that Nipco would not only sustain the modest performance of Mobil Oil  but also improve on it as it pursues the company’s vision of being the  first choice company in the hydrocarbon industry to all stakeholders.

    Another shareholder, Alhaji Suleiman Mohammed, noted the historic position of the acquisition as the first of such to be undertaken by an indigenous operator.

    He praised the Board of Nipco for taking such a laudable step which is fast reshaping the landscape of the downstream sector.

    Similarly, another shareholder, Alhaji Musa Felande, said the acquisition would benefit independent fuel marketers who will earn more returns through improved earnings on their shares in Nipco.

    He urged the board and management of the company to consider going into petroleum refinery in the near future.

    In his remarks, Managing Director, Nipco PLC, Mr Venkataraman Venkatapathy said the acquisition is an important synergy and part of a strategy to support Nipco’s continuous growth and expansion in the retail sector of the oil and gas industry.

    Venkatapathy, who stood in for the Chairman of Nipco, Chief Bestman Anekwe, said the company would continue to maintain the Mobil Oil brand at its retail outlets as well as continue to blend and sell Mobil Oil brand of lubricants under blending licence from ExxonMobil.