The merger deal between Chemical and Allied Products (CAP) Plc and Portland Paints & Products Nigeria Plc remains on track and is expected to be completed by the close of the first quarter (Q1) of this year 2021.
Investigations by Daily Sun reveal that the deal is subject to approvals from shareholders of both companies as well as final regulatory approvals and court sanction. The amalgamation of the firms, both subsidiaries of UAC of Nigeria Plc, had been in the works for more than one year and the transaction is expected to spin off a bigger entity that will run under the name CAP Plc which is expected to emerge at the end of the consolidation process.
Furthermore, the deal will involve the transfer of all Portland Paints Plc’s assets, liabilities and business undertakings including real property and intellectual property rights to CAP Plc.
In consideration for the transfer, CAP Plc is offering shareholders of Portland Paints a choice to receive N2.90 cash for every Portland Paints share held or one new ordinary share of CAP Plc, credited as fully paid up for every eight Portland Paints shares held. Also, a court ordered meeting is expected to hold on February 18 in which shareholders will be required to sign the proxy form involving both companies and ensure it is delivered to Africa Prudential (the Registrar) physically or via email not later than 24 hours before the meeting.
The merger represents a 45 per cent premium to the last traded share price of Portland Paints Plc on October 16, 2020, being the last business day prior to the date on which CAP Plc sent its merger proposal to the Board of Portland Paints and a 41 per cent premium on the trading price as at close of trading on October 23, 2020.
Fielding questions from journalists as well as the stockbroking community during the Facts behind the Merger: CAP Plc and Portland Paints Plc, which held virtually in Lagos, the Managing Director, CAP Plc, David Wright, said the decision to pursue the merger was driven by the Board’s strategic plan to aggressively grow and dominate the Nigerian and African markets.
Wright noted that the merger presents an opportunity for the company to create significant value for shareholders of CAP and achieve its strategic growth objectives as a larger company with a broader product portfolio, more corporate-owned brands and diversified revenues.
“There is obviously going to be significant growth that would come from this merger and even our revenue base projections will be ambitious. We will now have the opportunity to tap into the oil and gas business and this will be of huge benefits to our shareholders and so I think the potential to dominate the Nigerian and African markets is there and there will be an increase in share capital.
We have made plans for dividend and the company is in a good cash position and to generate more cash in the future. We could not pay a dividend as a result of the lockdown occasioned by the COVID-19 pandemic but going forward, we will return to our dividend policy and make some form of recommendation as regards that when we meet with the Board”, He said.
Also commenting, Managing Director, Portland Paints and Products Plc, Bolarin Okunowo, revealed that in recent months, the Board and Management of Portland Paints had evaluated various strategic options with a view to positioning the company to capture emerging growth opportunities.
She said, “Towards the close of 2020, demand and sales were resilient and we have improved our fundamentals. Our channels are strong and wide which is why we are merging with CAP Plc to create that growth foundation.
CAP Plc’s business is complementary to ours, and both companies will be better able to serve our respective customers by coming together. I believe the combination of Portland Paints and CAP will yield significant benefits for all of our stakeholders”.