CAP, Portland Paints Shareholders Approve Merger

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By Goddy Egene

The plan by Chemical and Allied Products (CAP) Plc and Portland Paints and Products Nigeria (PPPN) Plc to combine their respective businesses received a major boost last week as shareholders of the two paints company have approved the merger.

The approval was given at the court-ordered meeting (COM) in Lagos, which was also hosted virtually online, which set the final phase of the merger on its concluding processes.
According to the scheme of merger approved by the shareholders, shareholders of PPPN will receive one CAP share for every eight ordinary shares of PPPN or a cash consideration of N2.90 for every PPPN share.

The cash consideration represented 41 per cent premium on the last trading price of PPNN on October 23, 2020, being the last trading day before the announcement of the merger.

Subsequently, PPPN will be dissolved without being wound up, delisted from the NSE and its shares registration at Securities and Exchange Commission (SEC) withdrawn.

Managing Director, CAP, Mr. David Wright, said the business combination would scale up post-merger CAP from its second position in the paints industry to the first position.

He said the merger would lead to many benefits for the company and its stakeholders including expanded product offering, increased owned brand portfolio, diversified revenue base and broader distribution capabilities, all which will enhance customer satisfaction and lead to greater returns to shareholders.

Wright said the merger was a value-maximising opportunity to shareholders as well as holding out enormous opportunities for customers and other stakeholders.

According to him, the enlarged CAP will control about 15 per cent of the Nigerian paints market, the largest by any company in the highly fragmented sector while enhancing its leadership with 26 products offerings, an all-inclusive product portfolio that includes decorative, industrial, marine and protective paints as well as distribution network of 91 stores across 32 states of the federation.

The MD noted that CAP which plays in the premium and standard paints and coatings with globally recognised brands such as Dulux and Caplux, has enviable track record as a pioneer, having pioneered the colour centre concept in Nigeria in 2005, alongside other innovations.
He expressed optimism that the merger between CAP and PPPN would be concluded before the end of this quarter, having received all preliminary regulatory approvals.

Wright added that the completion of the merger will impact substantially on the post-merger CAP with access to more capital, opportunity to invest in its human resources, a stronger balance sheet and stronger footing as a leading paints company in Africa.

He said CAP will continue to explore opportunities for future growth through different routes including internal growth drives and acquisitions, assuring that the company as well positioned to maintain its leadership.

On her part, MD of PPPN, Mrs. Bolarin Okunowo, said the company supported the merger because of the value offerings including shareholder value creation, enlarged entity, enhanced decorative paints business and increased retail footprints.

According to her, PPPN holds a 35-year record of manufacturing and selling industrial, marine, decorative and protective paints for the construction and oil and gas industries in Nigeria, pointing out that the company’s flagship, Sandtex, is renowned for its exceptional quality for residential commercial and industrial buildings.

She said the merger would create opportunities for shareholders and stakeholders on both sides as the two companies have complementary synergies that would lead to greater returns.

Okunowo noted that the business combination will lead to an enlarged and a formidable paints and coatings company with larger brand portfolio including Dulux, Sandtex, Caplux and Hempel with the broadest distribution channels and retail footprint in Nigeria.