By Nnamdi Duru
Linkage Assurance Plc, one of the general insurance companies in the country, has formally announced its decision to discontinue merger talks with Cornerstone Insurance Plc.
The Managing Director of the company, Mr. Godwin Wiggle, confirmed this in a statement titled “Merger Talks Between Linkage Assurance Plc and Cornerstone Insurance Plc Called Off”, issued in Lagos over the weekend.
He recalled that the company entered into the botched merger discussions with Cornerstone to drive home the need for an enlarged entity to combat the challenges of operating in an extremely fragmented industry.
Wiggle stated that shareholders of the company were not in support of the merger, adding that this led to the end of discussions.
He said that the shareholders of the company have come to the aid of the company by y pumping in more resources to increase its stake in the risks underwriting company.
“Unfortunately, we were unable to conclude the exercise due to lack of consensus of the shareholders of Linkage Assurance on the matter. We believe that both companies will in their individual capacities work towards harnessing the opportunities open to the industry in our economy”, he said.
The Linkage Assurance boss stated his appreciation to the stakeholders who supported the company throughout its trying times, particularly policyholders, brokers and agents, adding , “we will continue to serve our numerous clients in accordance with global standards whilst observing the industry’s best practice”.
During the 2012 Annual General Meeting of the company in Lagos recently, shareholders asked the company’s board to discontinue the merger discussions, saying that even if the company should merge with another firm, it should not be Cornerstone.
Addressing shareholders at the meeting, President of the Progressive Shareholders Association of Nigeria, Mr. Boniface Okezie, argued that with N1 billion in fresh funds injected by Bayelsa State Government and another N1 billion expected from the National Deposit Insurance Scheme (NDIC), being proceeds of previous rights issue that was trapped in the rested Allstates Trust Bank Plc, the company does not need any merger for survival.
He also advised the board to do a right issue, assuring that shareholders would be most willing to take up their rights in the company accordingly.
Also Mr. Nona Awo threatened that shareholders would not allow the company’s board to rail-road them into a merger arrangement of 30:70 in favour of Cornerstone, adding that minority shareholders would definitely move against it.
In the same manner, President of the Nigerian Shareholders Solidarity Association, Mr. Timothy Adesiyan said: “we are not against merger, the company if the need arises could merge its operations with another company but definitely, we will not merge with a dwarf.”.
Responding to the demands of the shareholders, the Chairman of Linkage Assurance, Mr. Babatunde Fatai Williams noted that from the temperament of the investors, the board may not have the necessary support and vote to carry on with the merger plan.
According to him, the board has received the message from shareholders and would go back and consider it appropriately.