Independent petroleum marketer, NIPCO Plc has opened its Mandatory Takeover (MTO) for minority shares in Mobil Nigeria Plc. NIPCO, had in April this year, completed the acquisition of a 60% stake from Exxon Mobil America in a deal valued at N90 billion.
The nuggets
- The MTO is in compliance with SEC rules which require NIPCO to make an offer for minority shareholders holdings.
- We had reported earlier in December 2016 that an MTO was going to happen soon after the deal was approved by regulators.
- Application for the offer opened May 30 and will close June 29, 2017.
- The offer is priced at N417.2 per share which is higher than the company’s current share price.
SEC Rules and Regulations requires a Mandatory Takeover bid be made to all shareholders of a public company by any party that acquires 30% or more shares of the company.
MTOs are an opportunity for minority shareholders to exit a company at a reasonable price. They are also instituted to prevent a company from being acquired without taking into consideration the rights of minority shareholders.
What next after the MTO Bid?
- The MTO may spark a rally in the company’s shares traders as may decide to buy in order to make quick profit. The stock is currently trading at a significant premium to the price for the MTO.
- Mobil share price rallied immediately after the announcement and closed the day with a 10% pop.
- The shares could be on its way to N400 in less than a week as investors scramble to join the bull ride.
- Getting to buy Mobil Stock at the moment will also not be as easy as NIPCO would probably outbid every buyer other there in the short term
- We however, do not envisage a situation where they will gun for 100% of the stock. We believe anything within the range of 70-75% will satisfy NIPCO for now.
NIPCO formerly known as the IPMAN Petroleum Marketers Company was incorporated in 2001 as a private company to distribute petroleum products across the country. NIPCO in February this year listed its shares on the NASD which is a trading platform for unlisted securities. Mobil Nigeria Plc was listed on the Nigerian Stock Exchange (NSE) in 1978. It is one of the 5 major petroleum markets in the country with over 200 retail outlets.