Champion Breweries’ Shareholders Kick as Core Investor Moves to Make 100% Acquisition

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* Say SEC not doing enough to protect minority shareholders

Goddy Egene

Shareholders under the aegis of the Progressive Shareholders Association of Nigeria (PSAN) have picked holes in the approval given by the Securities and Exchange Commission (SEC) to The Raysun Nigeria Limited, which is a subsidiary of Heineken N.A, to take over Champion Breweries Plc 100 per cent.

The Dutch company currently holds about 84.7 per cent of the shares of Champion Breweries Plc.

However, SEC recently granted the company approval to proceed with the proposed Mandatory Takeover Offer (MTO) for 1,196,799,164 ordinary shares of Champion Breweries Plc at N2.60 per share, which represent the remaining 15.3 per cent stake in the company that the Dutch brewery did not yet own.

But PSAN has kicked against the move, saying SEC is not protecting minority investors in the country’s capital market enough.

In a letter to the apex capital market regulator, signed by National Chairman of PSAN, Mr. Boniface Okezie, the group urged SEC to stop The Raysun Nigeria Limited from buying out the minority shareholders.

The shareholders, instead, asked that the company be merged with Nigerian Breweries as Heineken did with previous acquisitions it had in Nigeria. PSAN alleged that the company did not follow due process in coming up with the MTO, saying the proposal is being carried out with the intention to delist Champion Breweries Plc from the Nigerian Exchange Limited (NGX).

PSAN stated, “The core investor has sought an MTO of the Champion Breweries Plc, which may result in the eventual delisting of its shares, a position we feel is detrimental to the interest of the minority investors.

“It is also our understanding that SEC approved the MTO without a tender paper indicating the approved buy-back price and other relevant details of the transaction. In the same vein, the NGX’s free float regulations require a minimum local ownership which appears not to be obtainable in the current ownership structure. “We would like to know what offence the minority shareholders have committed not to be invited to an extraordinary general meeting (EGM) where issues on the proposed MTO may have been adequately explained and due process followed to ensure that the interest of the common investor is protected.”

The shareholders lamented that the regulator was not doing enough to protect minority shareholders, a development, it said was causing low patronage of the capital market.

PSAN argued that Champion Breweries Plc was revived through the efforts of minority shareholders, including the Akwa Ibom Government, but they were about to be denied reaping benefits of their investments through the MTO.

The shareholders said they had resolved that none of their shares, including the 11 per cent owned by Akwa Ibom State, would be offered for sale to achieve the MTO.

It said, “We rather propose that a merger between the company and any other suitable match would be a more reasonable approach as has been done in the past by the same core investor instead of delisting the company shares.

“We request that shareholders be allowed to endorse a potential deal formally at an EGM where all stakeholder interests are represented. We have no issue with the core investor if they want to divest their investment, which they are at liberty to, but we insist that the core investor desists from practices can endanger the fortunes of other minority investors in the company.”

Market operators said the apprehension of the PSAN might be justified given recent experience of MTO in the market. In the past, Nigerian Bottling Company Plc and Seven-Up Bottling Company got delisted from the NGX after the majority shareholders bought out the minority shareholders.

Recently, shareholders of Mobil Oil Nigeria Plc had a similar experience, when NIPCO Plc acquired controlling stake in the company and later took out the minority shareholders through an MTO.

Mobil Oil Nigeria was later delisted from the NGX in May 2021. Also early this month, Union Diagnostic and Clinical Services Plc, and Studio Press Plc got delisted from the NGX after the majority shareholders of both companies bought out the minority investors of the separate companies.