Unilever Tender Offer: Lucrative Venture, Amid Caution | Independent Newspapers Limited
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Unilever Tender Offer: Lucrative Venture, Amid Caution

Posted: Jun 10, 2015 at 12:21 am   /   by   /   comments (0)

By Bamidele Ogunwusi  –  Lagos


“When I first heard about the Unilever tender offer, I thought it is one of those fables in the Nigerian capital market but I have since seen the reality that the company is serious and I couldn’t believe that the share price that was about N34 per ordinary share about four or five weeks is offered for N45.50 per  share.

“I have sold my shares in the tender offer and it is coming at a time I was planning to sell some of my shares to raise money for my soap making business. I will say the tender offer is coming at a good time for me. I will advice my fellow shareholders to take good advantage of the tender offer”.

That was the reaction of a shareholder of Unilever, simply called Andrew, who just benefitted from the tender offer by the company.

In the tender offer, Unilever Overseas Holdings B.V., the United Kingdom-based foreign core investor in Unilever Nigeria Plc, is seeking to increase its shareholding in Unilever Nigeria from 50.1 percent to 75.0 percent of the issued and paid up share capital of Unilever Nigeria. This translates up to 942,215,930 shares and a transaction valued at about N43 billion.

The tender on Monday was extended from June 10, 2015 to June 25, 2015. The Company has obtained approval the Securities and Exchange Commission for the extension.

Unilever had earlier filed the tender document with the Securities and Exchange Commission (SEC) and secured the necessary approval to launch the tender offer just as the nation’s apex capital market regulator has granted “no objection” letter to the tender document, a market refrain for regulatory approval.

As a tender offer, the offer is being made to shareholders directly and any shareholder who elects to sell some or all of their shares in Unilever Nigeria will have the opportunity to do so.

Citigroup Global Markets Limited and Chapel Hill Advisory Partners Limited have been the financial advisers to Unilever on the transaction.

While the attainment of 75 per cent equity stake will give Unilever Overseas the needed majority shareholding to effect major changes including delisting, mergers and acquisitions and share capital and corporate restructuring among others, the foreign core investor has promised to maintain Unilever Nigeria’s listing on the Nigerian Stock Exchange (NSE).

“Unilever has no intention to increase its shareholding above 75 percent or to delist Unilever Nigeria from the Nigerian Stock Exchange and the offer will have no direct impact on the employees of Unilever Nigeria. The company also has no intention to change the Board of Directors of Unilever Nigeria and remains fully supportive of the current management team and the company’s strategy,” the company stated.

A shareholder activist, Boniface Okezie, who is the President of the Progressive Shareholders Association of Nigeria, said he has no objection to the tender offer since it has received the approval of the Securities and Exchange Commission (SEC).

His words: “They didn’t tell us to surrender our shares officially as shareholder groups. One thing is that they are not forcing shareholders to surrender their shares. Though, I am not selling mine and I even want to buy more but I will not stop anybody from selling because the process is transparent and company is a good one”.

The company has been struggling with rising financing expenses and while it witnessed considerable growth in its top-line and effectively curtailed its operating expenses in the first quarter, burgeoning financial expenses undermined the performance of the conglomerate during the period.

Interim report and accounts of Unilever Nigeria for the three-month period ended March 31, 2015 showed that while sales grew by eight per cent and the group reduced operating expenses by nine per cent, a double in financial charges within the three months overwhelmed the performance of the conglomerate.

Unilever Nigeria’s pre and post tax profits dropped by 21 per cent each, a situation that simultaneously cut basic earnings per share by four kobo from 20 kobo in first quarter 2014 to 16 kobo in first quarter 2015.

In the unaudited report, it showed that sales rose to N14.91 billion in first quarter 2015 as against N13.83 billion recorded in comparable period of 2014. Financial charges jumped by 114 per cent from N381.6 million in first quarter 2014 to N817.91 million in first quarter 2015. With this, profit before tax dropped from N1.09 billion to N864.74 million while profit after tax slipped by same margin from N750.63 million to N590.45 million.

Key extracts of the audited report and accounts of Unilever Nigeria for the year ended December 31, 2014 showed declines in the top-line and the bottom-line. While sales were tepid, the bottom-line performance was however worsened by significant increase in finance charges.

At the company’s annual general meeting last month, shareholders, after approving the 2014 accounts and a dividend of 10 kobo per ordinary share of 50 kobo, charged the company to improve its performance in the year coming.

Despite the harsh operating environment, the company posted revenue of N55.754 billion for the 2014 financial year, compared to N60.004 billion recorded the previous year.

Its gross profit also stood at N20.170 billion as against N22.450 billion in the similar period of 2013.








Chairman of the company, His Majesty Nnaemeka Achebe, explained that the tough business decisions taken in 2014 have evolved a Unilever Nigeria that is better placed to thrive within the ever increasing ‘volatile, uncertainty, complex and ambiguous’ operating environment the company have to contend with.

However, Achebe told the shareholders that going forward; the company would focus on long-term profitability.

He said, “Having taken significant learning’s from 2014, we will be more aggressive about driving down costs and actively finding savings throughout all facets of our value chain. Our ambition is to continue to deliver value to all stakeholders and positively affect our communities by leveraging on the Unilever Sustainable Living Plan (USLP)”.