Seven-Up Minority Shareholders Approve 100% Ownership by Affelka
Shareholders of Seven-Up Bottling Company Plc on Thursday approved the Scheme of Arrangement through which the majority shareholder, Affelka S.A. would acquire the outstanding 26.8 per cent shares of the company. The shareholders gave the approval at the Court-Ordered Meeting in Lagos.
Affelka S.A. will now increase its ownership of the company to 100 by acquiring all the outstanding and issued shares, previously held by the minority shareholders. In consideration for the transfer of the shares, a payment of N125.00 per share, which represents a 22.6 per cent premium on the last traded share price of Seven-up on January 9, 2018 and a 27.6 per cent premium on the share price as at close of August 9, 2017 being the last business day prior to the date the initial proposal was received from Affelka.
Speaking at the meeting, Chairman, Seven-Up Bottling Company Plc, Mr. Faysal El-Khalil, said: “We believe that the scheme will create considerable benefits and opportunities for all stakeholders of Seven-Up Bottling Company Plc. and will serve to protect minority shareholders from a continuous erosion of value. Furthermore Seven-Up Bottling Company Plc. is again assured of Affelka’s long term commitment to the company and Nigeria.’’
Affelka had to increase the tender offer price from N112.70 to N125 to ensure the minority shareholders approve the proposal.
The majority shareholder in Seven-Up Bottling Company Plc, Affelka S.A who is offering to buy out the minority shareholders of the company has raised the tender offer price to N125.
Before the meeting yesterday, investment analysts at Afrinvest West Africa, had advised minority the shareholders of Seven-Up Bottling Company Plc to accept the tender offer from the majority shareholder, Affelka S.A.
According to Afrinvest, given the recent weak financial performance, historical illiquidity characterising Seven-Up’s stock – which will possibly worsen post-acquisition – and the premium offered by Affelka relative to the current market price, they recommended investors tender their shares for the price consideration.
The analysts explained that in its latest 2017 full year financial results, Seven-Up’s performance deteriorated on the back of rising direct and indirect cost profiles as well as finance charges despite growing revenue considerably.
Afrinvest explained that on the consideration of the options, its overall analysis favours a “Sell” decision premised on the illiquidity, weak investor sentiments and premium pricing.
“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,” they said
According to them, despite investor’s negative sentiment for the stock, their our outlook for FY:2017 performance remains rather bleak given the company’s high leverage and cost inefficiency.