Chemical and Allied Products (CAP) Plc and Portland Paints & Products Nigeria Plc are on track to execute a merger deal that will give rise to Nigeria’s biggest paint and chemical company by market capitalisation.
The amalgamation of the firms, both subsidiaries of UAC of Nigeria Plc, has been more than one year in the works, with a bigger entity that will run under the name CAP Plc expected to emerge at the end of the consolidation process.
“The proposed merger presents a compelling opportunity to create significant value for shareholders of CAP and achieve the company’s strategic growth objectives as a larger company with a broader product portfolio, more corporate-owned brands and diversified revenues,” the scheme of merger obtained from the Nigerian Stock Exchange (NSE) on Tuesday stated.
Equally, the deal will position the business to leverage the combined market shares and influence of the firms in delivering better shareholder’s value while pooling their assets together towards this end.
“The Scheme will involve the transfer of all Portland Paints’ assets, liabilities and business undertakings including real property and intellectual property rights to CAP,” the document added.
Once CAP and Portland Paints obtain shareholders’ consents to proceed with the transaction, both parties will approach the court to sanction the ‘marriage’, after which regulatory approvals will be sought from appropriate bodies including the Securities and Exchange Commission.
Portland Paints shareholders are at liberty to either receive N2.90 in cash for every share they own or accept one share in the enlarged entity in exchange for every eight they currently own.
In a situation where all shareholders go for the one for eight share reconstruction option, Portland Paints outstanding shares of 793,415,535 will be converted to 99,176,942 units in the new entity, where CAP’s ordinary shares stand at 700 million.
That makes the outstanding shares of the consolidated entity 799,176,942 units which, using CAP’s closing share price of N20, will bring the company’s market value to around N15.984 billion, making it Nigeria’s most capitalised paint and chemical company.
When the merger is delivered in March, “Portland Paints will be dissolved without being wound up, delisted from the Main Board of The Nigerian Stock Exchange … and the registration of the ordinary shares of Portland Paints with the Securities and Exchange Commission … will be withdrawn.”
Shares in the company closed on the NSE on Tuesday at N2.68 per share, up by 9.84 per cent.
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