Lafarge Wapco – There has been a lot of chatter the past week about the substance of the proposed merger of Lafarge Wapco and its related companies in South Africa and in Nigeria. The gist around was that minority shareholders of the Lafarge Wapco Nigeria, particularly South Africa based fund management company, Coronation Fund Managers who believe the value placed on Lafarge South Africa in the merger is overstated. Coronation Fund explained their reason in a letter written to Businessday as follows;
“The price being paid by Lafarge WAPCO of N215.3billion ($1.35billion) for incremental earnings of N10.3billion,implies a price earnings multiple of 20.9x for the acquired assets,while Lafarge Wapco currently trades on a 12.5x multiple,”
“by issuing shares at a rating that is 67% lower than the rating on the acquired assets, minority shareholders are greatly prejudiced.” It complained about the basis of arriving at a higher valuation for the South African assets, a market it said was ‘slow growing and in a mature market.’
“Of the $1.35billion deal, 60% relates to the South Africa assets. These assets are slow growing and operate in a mature market. Lafarge S.A are looking to sell their SA assets in exchange for shares in Lafarge WAPCO, an undervalued, high growth company operating in one of the most attractive cement markets on the continent. Lafarge S.A will have increased their shareholding in Lafarge WAPCO from 60% to 73% following the deal at the expense of minority shareholders,” Coronation explained.
The shareholders will be voting in the coming week and will be testing the new rule for the first time. The new rule according to SEC excludes majority shareholders from voting on deals which they sponsored or initiated. At this rate, I will be surprised if the shareholders approve this deal in its totality. This is one to watch
Seven Up Plc – This company released its full year audited results to some aplomb at the end of June. I expected the share price to soar and so far it has gained 10.2% this July. It’s a stock that will feature in the gainers and losers this coming week as investors await announcements of its proposed dividends.
Updated: Seven Up actually proposed N2.5 dividends.
Forte Oil – They seem to be creating a reputation for being the first out of the block with interim results. Having being classified as a “highly priced stock” last week an early release of its results is sure to have an impact on its share price.
Transcorp Plc – Transcorp shares has been traded in millions over the past two weeks. The huge trade in volume I hear is a trade off between a cluster of buyers and sellers rather than several other investors. It could be a trade between two companies or even the market makers doing some brisk business. Transcorp returned 10% last week and was second on the stock with the best return last week.
Custodian & Allied Plc – Insurance stocks have returned −2.5% this year to date. However, Custodian and Allied Insurance has returned a whopping 93% and is second on the list of Best Returned Stock this year. It added another 10% last week and don’t bet on it dropping off this week. The P.E ratio is about 17x with a market cap of N23.7b. The company though is not listed under the Insurance sector as it is basically a holding company for its General Insurance, Life Insurance, Pension and Trusteeship businesses. This is one to watch this week.