• Launches N60.2b bid for minority shares
NIPCO Investments Limited, a subsidiary of NIPCO Plc, at the weekend took over the 60 per cent majority equity stake of ExxonMobil Oil Corporation in Mobil Oil Nigeria Plc.
This is coming on the heels of the $301million acquisition approval by capital market regulators.
The cross deal for the transfer of the 60 per cent equity stake from ExxonMobil to NIPCO was executed on the Nigerian Stock Exchange (NSE) at the weekend, with Cordros Securities Limited acting as execution stockbroker for the deal.
The deal, worth N90 billion at current exchange rate, was one of the biggest transactions in the downstream sector in recent years.
Both the Securities and Exchange Commission (SEC) and NSE as well as other Nigerian and relevant foreign regulators had approved the deal.
Under the deal, ExxonMobil transferred its total shareholding of 216.36 million ordinary shares of 50 kobo each to Nipco Investments Limited for the consideration of $301 million.
The block divestment was done through the negotiated cross deal platform of the Exchange, a special-purpose trading platform that is meant for voluminous transaction equivalent to five per cent or more of the issued shares of any company.
By the cross deal, it implies that the buyer and the seller had been prearranged and the transfer at the stock market was a mere perfection of the agreement between the two. The negotiated cross deal allows the parties to the deal to close the deal at reduced cost.
The completion of the acquisition has also triggered a mandatory tender offer (MTO) bid by NIPCO for the minority shareholders in line with 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.
Under the terms of the MTO, NIPCO is expected to offer to buy the minority shares at the same price of N417.12 used under the ExxonMobil transaction.
Mobil Oil Nigeria opens today at the NSE at N300 per share, thus the tender offer price implies a premium of 39.04 per cent. Mobil Oil Nigeria has total outstanding shares of 360.595 million ordinary shares of 50 kobo each, with the remaining 40 per cent minority shares totalling 144.238 million ordinary shares of 50 kobo each.
Sources said the board of NIPCO has applied and received approval of SEC to proceed with the MTO.
ExxonMobil and Nipco had in October 2016 executed a sale and purchase agreement (SPA) to sell the former’s majority equity stake of 60 per cent in Mobil Oil Nigeria (MON) to Nipco, an indigenous oil and gas company.
Formerly known as IPMAN Petroleum Marketing Company Limited (IPMCL), Nipco was incorporated by members of the Independent Marketers Association of Nigeria (IPMAN) on January 8, 2001 as a private limited liability company to participate in the distribution of white petroleum products business in Nigeria.
Mobil Oil Nigeria was incorporated as a private limited liability company in 1951 and converted to a public limited liability company in 1978. Its shares were listed on the NSE in 1979. Mobil Oil is a subsidiary of Mobil Oil Corporation of the United States, which holds 60 per cent equity stake.
Nipco Managing Director, Mr. Venkataraman Venkatapathy, said the SPA marks the beginning of a six-month transition for the effective takeover of the downstream oil giant.
“Nipco considers this acquisition an important synergy. It is part of our strategic move to support Nipco’s continuous growth and expansion of its retail footprint. We are confident of adding tremendous value to MON and likewise MON will add a huge value to Nipco. In furtherance of this value addition, Nipco will continue to maintain the Mobil brand on its retail outlets as well as continue to blend and sell the Mobil brand of lubricants under Branding Licence(s) from ExxonMobil,” Venkatapathy said.
According to him, Nipco would justify the confidence repose in it by ExxonMobil for selecting it as the preferred bidder for the acquisition of MON and Nipco will continue to ensure full brand compliance with ExxonMobil’s global standards as well as rigorously sustain and follow ExxonMobil’s code of conduct, ethos and operational excellence.
“MON will continue to run as a separate, distinct and independent company ,from Nipco Plc .Each with its own chief executive officer .Each chief executive officer will report to its board of directors,” Venkatapathy stated .
According to him, in addition to giving the employees much needed assurances on their job safety, Nipco’s goal is to increase presence and efficiency by expanding MON’s retail footprint to a minimum of 300 by December 2017 and make it a vibrant one.
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