Article Summary
- Femi Otedola, a billionaire and serial investor, has exited his 6% stake in Transcorp Plc after reaching a deal with Elumelu to exit the company.
- The negotiations leading to the agreement were swift yet cordial, with both parties opining it was in their mutual best interest to part ways.
- Confirmed sources from Elumelu’s camp who spoke to Nairametrics exclusively explained transaction closed at the prevailing market price of Transcorp Plc as of April 27th, 2022
Serial investor and billionaire, Femi Otedola has exited his stake in Transcorp Plc, Nairametrics can confirm.
Otedola had acquired a above 6% stake in Transcorp over a series of carefully orchestrated purchases going almost unnoticed until the acquisition was announced. Nairametrics first announced the acquisition.
Reliable sources with knowledge of the transaction inform Nairametrics that the billionaire investor reached a deal with Elumelu to exit the company.
The decision effectively staves off a possible greenmail situation for Transcorp which may have turned out murky.
Both parties entered negotiations about a possible exit in the early hours of Thursday after both had declared willingness to work together in an apparent bromance.
The negotiations leading to the agreement were said to be swift yet cordial as both parties opined it was in their mutual best interest to part ways. Elemelu and Otedola publicly agreed to work together to promote Transcorp’s interests.
Sources also indicate the attention drawn by the jostle for shareholding was a distraction for the company thus paving the way for a decision to part ways. It is understood that both parties will continue to explore other forms of collaboration over their common interest in the power sector.
Confirmed sources from Elumelu’s camp who spoke to Nairametrics exclusively explained transaction closed at the prevailing market price of Transcorp Plc as of April 27th, 2022. Sources from Otedola’s camp however opined the billionaire exited at a premium to his average cost, pocketing a profit.
An announcement of the transaction is however imminent on the Nigerian Exchange.
Mr Otedola announced in early April that he had acquired 5.53% of Transcorp making him the second-largest shareholder of the company. The purchase immediately triggered a rally for the share price of the stock, doubling in under two weeks.
In response to Mr. Otedola’s acquisition, Elemelu consolidated his holdings, increasing his ownership stake to about 25% which he announced on April 26th, 2023.
Brisk business for Otedola
Nairametrics first reported on the 12th of April, 2023 billionaire investor Femi Otedola had acquired 5.52% of Transcorp shares making him the second largest shareholder of the company.
The billionaire acquired over 2 billion shares of the conglomerate in stealth finally declaring the ownership after months of mopping up the stock. He then took his stake in the company to as much as 6.3% triggering a bidding war for the stock.
Armed with financial muscle, Elumelu’s camp moved to strengthen its control of the company moping up more shares even as they publicly welcomed Otedola to its fray. On Thursday, 27th of April Transcorp informed the Nigerian Exchange Limited (NGX) and the investing public of the acquisition of new shares by HH Capital Limited.
HH Capital Limited acquired 9,697,189,984 units of shares, bringing their total holdings in Transcorp to 9,991,173,177 units, representing 25.58% of the Company’s total shares. This fast-tracked a decision between both parties to hash out an exit for Mr. Otedola, who we understand was about to seek a board seat.
Optics
The Elumelu’s camp sees this as a win-win situation as the decision to buy Otedola out staves off a possible greenmail situation. Greenmail refers to the strategy of purchasing enough shares in a company to pose a threat of a hostile takeover, thereby compelling the target company to buy back its shares at a premium price instead.
- In the context of mergers and acquisitions, greenmail serves as a defensive mechanism against the takeover bid. The targeted company repurchases its stock at a significant premium price to prevent the takeover, leading to substantial profits for the individual or entity behind the greenmail strategy.
- Details of the transaction indicate both parties agreed to exit Otedola at a premium to his average cost of acquiring the shares over the last few months.
It brings to an abrupt end one of the most intriguing corporate moves in 2023. Transcorp share price was down 9.9% in the early hours of Friday. The stock was on full offer with over 100 million shares on offer with limited bids.
Note: This article has been updated to indicate information from Elumelu’s camp that the sale was done at the prevailing market price.
It’s a limited win-win situation: FO is smelling to the bank with huge profit in a matter of weeks while Tony had to rescue his stake at a huge cost. We know the real winner!