KENYA – East Africa’s leading supplier of food grade liquefied carbon dioxide, Carbacid Investments Limited (CIL) in collaboration with Aksaya Investments LLP have placed a Kshs 1.2 billion(US$10.9 million) takeover bid for 100% shares of BOC Kenya, as part of its market expansion plans, subject to regulatory approvals.
Aksaya Investments LLP is a local investment firm wholly owned by veteran local entrepreneur B. C. Patel, who also holds, jointly with A.B. Patel, a 40.38 per cent shareholding in Carbacid.
The proposed transaction will result in the largest combined industrial gases business, bringing together Carbacid’s carbon dioxide operation and BOC’s oxygen and other gas products, reports Business Daily.
“The co-offerors have chosen to make the offer as they believe that the combination of BOC’s product portfolio and services with Carbacid’s existing business is an excellent match that will position the enlarged group to become the East and Central African region’s supplier of choice for industrial, medical and special gases and related equipment services,” Carbacid said in a notice.
BOC Holdings which holds 65.38 per cent of the ordinary shares of BOC Kenya has issued an irrevocable undertaking to the Offerors to accept the offer on certain terms and conditions including a long stop date of 31 July 2021.
The offer is also subject to there being no reduction of more than 15 per cent in the net asset value of the Company as at December 31 2019.
“The co-offerors have chosen to make the offer as they believe that the combination of BOC’s product portfolio and services with Carbacid’s existing business is an excellent match.”Carbacid
Failed attempt of Carbacid’s acquisition by BOC
In 2005, BOC had attempted to acquire a majority stake in Carbacid as a means of entering the carbon dioxide market, but the Kenya Capital Markets Authority (CMA) blocked the transaction, citing breach of terms by the proposed acquirer.
Under the transaction, BOC had wanted to acquire 10.6 million shares in Carbacid, which would have brought its shareholding to 94 percent.
This in turn led to both companies being suspended from the Nairobi Stock Exchange.
After close to four years of protracted legal battles with the CMA, BOC Kenya announced on October 15 2009 that the share purchase had elapsed.
Coupled with an out of court settlement, the industrial gas manufacturer started the process of returning the share certificates it had taken from Carbacid Investment shareholders. A month after, both companies resumed trading on the bourse.
BOC’s sales and earnings have dropped substantially in subsequent years, owing to increased competition that has made it difficult for the company to raise prices despite rising costs.
Carbacid being a major producer of carbon dioxide which is used to make fizzy beverages like soft drinks, among other applications, has also faced increased competition in recent years from alcohol manufacturers who harvest the gas as a by-product of their production process.
To this end the acquisition is meant to give Carbacid a competitive edge as it expands its portfolio.
“CIL will bring its effective business and strategic acumen and deep knowledge and experience of the local industrial gas market, which can generate significant synergies between the two businesses,” said Chairman Amb. Dennis Awori.
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