WorldStage Newsonline– The boards of directors of Chemical and Allied Products PLC (CAP) and Portland Paints and Products Nigeria PLC on Monday, 26 October 2020 announced a decision to merge their respective businesses in a deal worth N2,300,905,051.5 with CAP emerging as the resultant entity.
In separate similar statements by the two companies issued at the Nigerian Stock Exchange (NSE) , the respective boards were said to have strongly believe that the proposed merger, which provides a unique opportunity to change the Nigerian paints and coatings landscape, will be attractive and value accretive to shareholders of both companies.
The proposed merger subject to the required regulatory and corporate approvals would require CAP to offer shareholders of Portland Paints a choice to receive N2.90 cash for every Portland Paints share held or one new ordinary share of CAP, credited as fully-paid up for every eight Portland Paints shares held.
Portland Paints with shares outstanding of 793,415,535 will worth N2,300,905,051.5 with the proposed N2.90 offer which is 41.46% higher than its current price at the stock market.
“The decision to pursue the Proposed Merger is driven by the strategic objectives of the Boards of CAP and Portland Paints to drive growth and expansion within the Nigerian and African markets. CAP and Portland Paints play in distinct segments, and the enlarged CAP will have a broader portfolio covering the top-end/premium decorative segment, the mid-market decorative segments as well as the industrial segment (in particular marine and protective coatings). We believe that the Proposed Merger will provide our customers access to a broader product portfolio and a wider range of value options to meet their needs,” the statement said.
“The combination of CAP and Portland Paints will create a formidable paints and coatings company that will be strategically positioned across segments as a result of its combined brand portfolio (Dulux, Sandtex, Caplux and Hempel); its diversified product ranges spanning decorative and industrial with widespread distribution channels and retail footprint in Nigeria.
“Subject to receipt of the relevant regulatory and corporate approvals, the Proposed Merger will be executed by way of a Scheme of Merger (the “Scheme”) in accordance with Section 711 of the Companies and Allied Matters Act, 2020 and other applicable laws, rules and regulations. The Scheme will involve the transfer of all Portland Paints’ assets, liabilities and business undertakings including real property and intellectual property rights to CAP.
“The proposed consideration represents a 45% premium to the last traded share price of Portland Paints on October 16, 2020, being the last business day prior to the date on which CAP sent its merger proposal to the Board of Portland Paints and a 41% premium on the trading price as at close of trading on October 23, 2020.
“Completion of the Proposed Merger is subject to approvals from the Federal Competition and Consumer Protection Commission, the Securities and Exchange Commission, The Nigerian Stock Exchange as well as shareholders of CAP and Portland Paints, respectively.
“The Proposed Merger is also subject to the sanction of the Federal High Court.”
Commenting on the Proposed Merger, David Wright, Managing Director of CAP, said: “The decision to pursue the Proposed Merger, is driven by the Board’s strategic plan to aggressively grow within the Nigerian and African markets. We believe that the Proposed Merger presents a unique opportunity that will benefit all stakeholders, from shareholders to customers as well as the broader economy. I am excited by the prospect of an enlarged company with a broader decorative paint portfolio covering the premium, midmarket and affordable segments and the inclusion of marine and protective coatings, all of which will benefit our customers and shareholders.”
Bolarin Okunowo, Managing Director of Portland Paints, said: “In recent months, the Board and management of Portland Paints have evaluated various strategic options with a view to positioning our company to capture emerging growth opportunities. CAP’s business is complementary to ours, and both companies will be better able to serve our respective customers by coming together. I believe the combination of Portland Paints and CAP will yield significant benefits for all of our stakeholders.”
Meanwhile, shareholders have been advised to exercise caution when dealing in the securities of CAP and Portland Paints until requisite approvals are obtained.
The stock price of CAP remained flat at N18.5 today with only 10 transactions involving 62,165 stocks valued at N1,223,199.25 while Portland Paints also remained unchanged at N2.05with two transactions involving 2,000 shares valued at N4,302.00