NIGERIA – Unilever Overseas Holdings B.V, the parent firm of Unilever Nigeria Plc has said its current moves to increase its stake from 50.10 per cent to 75 per cent will boost the performance of the company in the years ahead.
Unilever Oversees had earlier this year announced its intention to make an offer to increase its equity stake in Unilever Nigeria Plc as it looks to grow its business in the country and continue its long term commitment in African markets.
According to the offer document, the move will see Unilever increase its equity stake in the Nigeria business from the current 50.10 per cent to a maximum of 75 per cent.
Unilever Overseas Holdings said it aims to maintain the company’s listing on the Nigerian Stock Exchange (NSE), thus eliminating fears of delisting from NSE.
The offer document and recent notice from the company revealed that shareholders now have until June 25, 2015 to tender their shares for purchase if they so wish.
Prior to the opening in May, Unilever Nigeria Plc secured the necessary approvals from the Securities and Exchange Commission and Nigerian Stock Exchange.
Under the terms of the offer, Unilever Overseas Holdings would acquire up to 942,215,930 shares in Unilever Nigeria Plc at N45.50 per share in cash.
Analysis of the offer price showed a premium of 33.8 per cent to the company’s closing share price of N34 on March 23, 2015, the day prior to Unilever announcing its intention to make the offer at a premium of 33.2 per cent to the three month Volume Weighted Average share price as at the same date.
The total value of the transaction at the intended offer price is approximately N42.871 billion (€192.6 million at prevailing exchange rates).
The offer provides shareholders who wish to sell some or all of their shares in Unilever Nigeria the opportunity to do so.
The directors of Unilever Nigeria, who have been advised by FBN Capital Limited, consider the terms of the offer to be fair and reasonable from a financial point of view, to the other shareholders of Unilever Nigeria.
Citigroup Global Markets Limited and Chapel Hill Advisory Partners Limited are acting as financial advisers to Unilever Overseas Holdings B.V.
Some analysts believe the offer could not have come at a better time as it not only shows Unilever Overseas Holdings confidence in the nation’s economy, but also the desire to provide strong support from the parent company.
Prior to the announcement of the offer, the Chairman of the board of directors, Unilever Nigeria, Nnaemaka Achebe had disclosed that the current financial year would be daunting. He stated this while addressing shareholders at the 90th annual held in Lagos early March.
He explained that the operating environment in 2014 was harsh and noted that the situation has not changed in 2015.
Unilever Nigeria has experienced dwindling fortunes in the recent years due to rising cost of operations and very high cost of funding. While it witnessed considerable growth in its top-line and effectively curtailed its operating expenses in the first quarter of 2014, burgeoning financial expenses undermined the performance of the conglomerate during the period.
However, the company’s unaudited results for the three months ended March 31, 2015, showed some improvement.
Analysts explain that the offer price of N45.50 is an attractive share price premium based on the 33.8 per cent premium to the pre-announcement share price of N34 per cent premium.
Some shareholders have indicated interest, seeking to cash in to the offer on the prediction that the share price may revert to their pre-historic status.