Investors challenge exit prices proposed for Union Bank, Oando acquisitions
Investors in Nigerian capital market have expressed their dissatisfaction with the exit prices in the scheme of arrangement proposed by Titan Trust Bank Limited and Ocean and Oil Development Partners Limited (OODP) to acquire all shares of minority shareholders in Union Bank Plc and Oando Plc respectively.
The shareholders stated that the considerations for minority shareholders are unacceptable and will be challenged at the companies’ Extra Ordinary General Meetings (EGMs) to ensure fair value in respect of the exit prices.
This is coming after the companies recently disclosed to the investing public that their core shareholders had made an offer to acquire the shares of all minority shareholders. According to a statement garnered from the Nigerian Exchange Limited (NGX)’s website, Union Bank recently disclosed that its core shareholder, Titan Trust Bank Limited, had made an offer to acquire the shares of all minority shareholders in the bank.
It noted that the transactions will be implemented by way of a Scheme of Arrangement between the bank and the bank’s shareholders (the Minority Shareholders).
Under the terms of the scheme, the outstanding shares of the bank not already held by Titan Trust will be acquired for a consideration of N7.00 per share.
Similarly, Oando Plc disclosed that it has received an offer from its core investor, Ocean and Oil Development Partners Limited (OODP), to acquire the shares of all minority shareholders in the company. Following the acquisition, the company will be delisted from NGX and Johannesburg Stock Exchange (JSE) and re-registered as a private company.
According to the oil and gas company, under its scheme of arrangement, each shareholder shall be entitled to receive the sum of N7.07 in cash or its equivalent in South African Rand (ZAR) for every ordinary share held by qualified scheme shareholders at the effective date of the scheme.
Although Oando and Union Bank are not the first companies to receive a buyout request from their majority shareholders, shareholder association leaders who spoke to Daily Sun complained that the exit price offered to buy out the shareholders was “unfair”.
The President of the New Dimension Shareholders Association, Patrick Ajudua, noted that the ultimate protection of minority shareholders is important in terms of giving shareholders value for the share purchase.
He stated that the Securities and Exchange Commission (SEC) and the NGX must ensure that in giving approval of the scheme of delisting, the interest and protection of minority shareholders are paramount. in their consideration.
“As shareholders, the prices being offered by Titan Trust Bank and Oando are far from satisfactory to us. So, we are calling on the management of the companies to ensure fair treatment of the minority shareholders in their exit plans. That would take care of our concerns.
“The shareholders in the EGMs will engage the companies with a view to getting fair value for the exit price. We will take the liberty at Extra-Ordinary Meetings (EGMs) to call for an upward review of the price”, he said.
He also called for shareholders to resist the attempt to short-change them by insisting that the EGMs must not be conducted virtually as this will further place the bank at an advantage of stage managing the meeting to obtain required approvals.
Also speaking, the National Coordinator of the Independent Shareholders Association of Nigeria (ISAN), Moses Igbrude, also expressed worry about how Union Bank and Oando Plc would conclude to pay shareholders N7.00 and N7.07, respectively, as an exit price.
He also lamented the paucity of returns over the years and suggested minority shareholders have been left worse off due to a lack of dividend payments and a reduction in shareholder value.
“After the core investors acquire the majority shares, over the years they run down the business under the watch of regulators.
“By not paying dividends and not making a good return on investments to shareholders and the prices of shares are now low, which is grossly undervalued, both companies are now using the opportunity to sell some of the assets of the companies.
” Using the same money realized to pay out minority shareholders instead of sharing the profits as a special dividend.” Igbrude said.
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