Given the statements of the Chairman, May and Baker Plc., Lt General Theophilus Danjuma, it seems more and more likely that the company will consider selling some of its less profitable assets in a bid to restructure and strengthen the company’s portfolio.
When?
The Chairman, at the Annual General Meeting of the company held last week, said a review of all the company’s business units had been commissioned with a view of “pruning all non-performing and non-profitable ventures” With these words, it seems very probable that the company will likely sell off these unprofitable units as soon as possible, given that the aim is to boost its financials for the 2017 fiscal year.
Why now?
According to the Chairman, this move is necessary for different reasons, some of which are
- Expanding the company’s dominance on the national scene to a sub-regional level as it aims to be the leading pharmaceutical company in West Africa
- The company plans to acquire new competencies, which likely implies branching out into other areas of pharmaceuticals not currently catered for in the company’s portfolio and deepen its market penetration
However, given that this decision is hot on the heels of the Federal Government’s 12- year old agreement with the company for local vaccine production, other reasons for the immediate clear out may include
- The desire to free up needed funds to undertake the vaccine project in order to reduce the amount of additional debt it would require to fund the vaccine project
- A need to recalibrate the company’s staff structure to accommodate new staff in the area of vaccine production without spiking its wage bill
Likely effects
If eventually carried out, the sale or closure of these units may have the following consequences
- Mass layoff of workers in the affected units
- Compulsory retirement of staff who have spent an appreciable number of years in the company’s service
- Depending also on a host of other factors, the company’s 2017 fiscal year report may report higher profits than usual due to the sale of the assets and reduction in wage bill