Union Diagnostics Moves to Approve Buy-out of Minority Investors

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Goddy Egene
Shareholders of Union Diagnostics and Clinical Services Plc will on January 25, 2021, approve a bid by Cedar Advisory Partners Limited to buy the 39.62 per cent held by minority shareholders.

Cedar Advisory Partners had last March launched the N492.75 million buy-out bid expected to raise its stake to 59.66 per cent to make it the single largest shareholder of Union Diagnostics and Clinical Services Plc.

The shareholders are expected to approve this bid at a court-ordered meeting (COM) scheduled to hold in Lagos. And given past experiences, the buy-out of the minority shareholders would lead to eventual delisting of Union Diagnostics and Clinical Services Plc from the Nigerian Stock Exchange (NSE) almost 14 years after it was listed in May 2007.

The COM would be preceded by annual general meeting (AGM) of the shareholders where they would review its full-year performance for the period ended December 31, 2019.

According to the notice of the COM, shareholders of Union Diagnostics are expected to approve the Scheme of Arrangement dated Monday, December 7, 2020, while authorising the directors, “to consent to any modifications of the Scheme of Arrangement that the Federal High Court or any regulatory authority may deem fit to impose or approve.”

Directors of Union Diagnostic had in March last year, confirmed receipt of a binding offer from Cedar, seeking to acquire a total of 1.408 billion ordinary shares of 50 kobo each held by all minority shareholders at an offer price of 35 kobo, in addition to its current 711.92 million units.

Union Diagnostic is an indigenous and home-grown company in the medical diagnostics and healthcare sector owned by over 10,000 Nigerian shareholders and has been offering full and comprehensive services in diagnostic medicine since 1994.
Cedar currently holds 711,916,612 ordinary shares representing 20.04 per cent equity holding in the company. However, at the end of the transaction, Cedar will hold a combined 59.66 per cent.
Union Diagnostics was listed at N3.00 each in 2007 and had plans to become the nation’s leading diagnostic firm across the West Africa sub-region, with a vision to become a global player.

However, the firm has not been unable to achieve its enviable plan to dominate the market, with at least one branch in each state of the country due to the influx of smaller competitors into the market.

Cedar Advisory is engaged in investment banking, CFO outsourcing services, insurance brokerage, legal compliance services, business performance management, and due diligence service. It has as part of its completed transactions the acquisition of 75 per cent of Great Nigeria Insurance Plc by Insurance Resourcery Consulting Services Limited in 2013. Cedar raised $20 million to finance the management buyout. GNI eventually delisted voluntarily from the NSE in 2019, a move for which Cedar acted as an adviser, coordinating all relevant parties to the transaction.