The Nigerian Stock Exchange (NSE) has delisted the entire shares of Vono Products following its merger with Vitafoam Nigeria Plc. Before the delisting last week, the shares of the company had been placed on suspended from trading since March 21, 2016. The NSE had said Vitafoam and Vono Products had obtained Court’s sanction of their scheme of merger effective March 11, 2016.
The exchange had explained that at the conclusion of the merger process, Vono Products Plc would be dissolved and de-listed from the Daily Official List of the NSE.
Vitafoam Nigeria had in August 2010 acquired majority shareholding in Vono Products and took over the board and management of the company. Vono Products in 2012 launched a N840 million rights issue to strengthen its operations and pursue expansion programme as part of efforts to emplace the company on the path of sustainable profitability.
However, Vono Products Plc had reported a loss of N102 million for the year ended September 30, 2015, compared with a loss of N11.9 million in 2014. Also, the company ended the period with a negative working capital of N645 million, a development that made the company’s auditors, Ernest & Young to raise doubt about its continuing as a going concern.
Despite the poor financial state of Vono Products, the Group Managing Director, Vitafoam Nigeria Plc, Mr. Taiwo Adeniyi said merger of the two companies would create better values for shareholders and enhance the long-term competitiveness of the larger company.
According to him, the shareholders of the two companies voted in favour of the merger because of potential benefits such as economies of scale, cost savings and improved operational and administrative efficiencies among others.
“If we produce foam and Vono produces furniture, they are complementary. It is a strategic decision for Vitafoam to have Vono as a subsidiary. As you are aware, we have other subsidiaries such as Vitabloom, Vitagreen and Vitapur. Each of them produces distinct products. But they have something in common and this defines the unity of purpose,” Adeniyi had said.
He noted that the national spread of the group and its international operations have positioned it to weather tough operating environment and continue to deliver better value for shareholders.