Seven-Up Bottling Company Plc. (SBC) has notified the Nigerian Stock Exchange (NSE) and the investing public Wednesday of an upward review of the scheme consideration for the company’s minority shares to N125 per share from the earlier N112.70k per share.
Affelka S.A – the holder of 73.0 percent of the company’s shares outstanding – has signaled intentions since last year to completely buyout minority shares in SBC for a consideration of N112.70 per share relative to the market price of N97.12 as of December 7, 2017.
The notification signed by Samuel Oboh, SBC company secretary, indicated that the proposed new consideration represents a 22.6 percent premium to the last traded share price of the company as of January 9, 2018, and a 27.6 percent to the share price as of August 10, 2017, which was the last business date the initial proposal was received from Affelka S.A.
While the planned purchase is still subject to approval by the shareholders at a court-ordered meeting scheduled for Thursday, January 11, 2018, the company has received a “No Objection” from the Securities and Exchange Commission (SEC). To this end, market analysts are recommending that the minority investors tender their shares for sale.
“Following the planned acquisition of the ordinary shares of investors, minority investors are faced with the decision to either “SELL” or ‘HOLD”. On the consideration of the options, our overall analysis favours a “SELL” decision,” analysts at Afrinvest said late last year
Their sell decision is premised on illiquidity, weak investor sentiment and the premium pricing on offer. They claim that in the event that the shares of minority shareholders are being bought over, investors who decide to “HOLD” would be faced with illiquidity challenge associated with the stock.
As such, prices of the stock will remain rather unreflective of fair market pricing, thereby indicating an increasing likelihood of a substantial loss in value of investments.
The premium pricing on offer seems the bait for investors to sell.
“Despite the underwhelming performance so far in the year, the offer price of N125 presents an attractive opportunity for investors to recoup losses which have weighed on portfolio and invest in more liquid and fundamentally driven stocks to boost overall portfolio performance,” analysts say.
If the scheme pulls through, the shares of SBC would be delisted as it would seize to be a quoted public liability company.