The plan by the British majority owner of consumer goods company PZ Cussons Nigeria to fully acquire the Lagos-listed organisation and take it private fell apart after a key regulator withheld an assent necessary to take the transaction further.
โThe Securities and Exchange Commission (โSECโ) has declined the companyโs request for its No Objection to PZ Cussons (Holdings) Limitedโs (โthe majority shareholderโ) intention to acquire the shares held by all the other shareholders,โ a statement published on the Nigerian Exchange (NGX) on Wednesday said.
Shares in the company, which had constantly traded at N40 over the past twelve days, had fallen by 7.5 per cent on Lagos Customs Street as of 09:33 WAT after the news reached the public.
PZ Cussons (Holdings) Limited UK owns a 73 per cent stake in PZ Cussons Nigeria, its local subsidiary, and has been on the drive for over half a year now to talk shareholders into selling their holdings.
For a start last September, it tabled an offer price of N21 per share at a premium 9.9 per cent higher than the then market price (N19.10) of the stock.
The board held talks with the core shareholder with a view to bucking the offer up, and announced on 9 November the price had been set at N23. PZ Cussons Nigeriaโs shares finished that day trading at N21.05.
The stock has seen volatile price movements since the beginning of this year, and has been stuck at N40 per share since 8 March few weeks after the board said that its shareholdersโ fund or net worth had turned negative after assets exceeded liabilities by N23.2 billion.
PZ Cussons Nigeriaโs shares currently trading at N40 means the core shareholders need to increase the last offer it tabled to minority stockholders by 74 per cent to be at par with the present market price and further raise it afterwards to attract sellers and keep its ambition alive.
That option is seemingly out of the question now, with the companyโs strained financial position and the prevailing market conditions likely to make a buyout unattractive for its core investor.
โThe Board will communicate further developments to shareholders in due course,โ PZ Cussons Nigeria assured in its note to NGX.
Bukola Olonade-Agaga, who leads the companyโs investor relations team, said PZ Cussons Nigeria has disclosed โeverything that we know to the public,โ advising that SEC should be contacted for further information.
Joy Onoja, who speaks for SEC, could not immediately respond to PREMIUM TIMESโ request for the reason for the watchdogโs refusal to endorse the transaction but promised to do so soon.
SECโs refusal to greenlight the deal cut short the transaction quite early, forbidding negotiators from proceeding to a crucial phase in the process where they would have had the chance to meet shareholders directly once the Federal High Court gave the permission to do so.
Nigeria is PZ Cussonsโ largest and most diverse single market, according to information on the operating companyโs website, a strong motivation for any parent company based abroad to desire complete ownership of a subsidiary like this.
The latest financials of PZ Cussons Nigeria showed the company recorded a net loss of N74.1 billion for the half year ended 30 November 2023 compared to a net profit of N7.7 billion a year earlier.
A foreign exchange loss of N87.1 billion, on its own 27.9 per cent higher than the total revenue for the period, set the company up for the record net loss.
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