Minority shareholders of PZ Cussons Nigeria Plc have rejected the offer price of N21 per share being proposed by PZ Cussons (Holdings) Limited, the Core Shareholder, to acquire all the other shareholders of the company.
In an exclusive chat with Nairametrics, the shareholders said the consideration is unacceptable and would be challenged in court to get fair value for their shares.
Nairametrics reported that PZ Cussons Nigeria Plc (PZCN) has announced that PZ Cussons (Holdings) Limited plans to purchase all outstanding shares from its shareholders at a rate of N21 per share.
PZCN currently has 3,970,477,045 shares listed on the Nigerian Exchange Limited (NGX).
This proposed transaction is however contingent upon approval by PZCN’s board, the company’s shareholders, and the necessary regulatory authorities according to a statement signed by its Ag. Company Secretary, Olubukola Olonade-Agaga on the floor of the NGX.
Reacting to the development, The President of the New Dimension Shareholders Association, Mr. Patrick Ajudua in an exclusive chat with Nairametrics noted that shareholders reject outrightly the proposed intention of PZ Cusson UK to buy out minority shareholders in Nigeria for a peanut of N21.
What he said
- “It’s unfair, unjust, and means to shortchange minority shareholders. This is a company that has over the last 3 years been involved in asset stripping, they sold part of the factory land at Ikorodu to Friesland Campina for consideration of N2.12 billion and from there paid a dividend.
- The following year the company disposed of non-core assets with a consideration of N9.84 billion and from there also paid dividends.
- Therefore, the company has been involved in serial disposal of its assets, using part to pay shareholders as dividend rather than pay from operational profit, thereby planning their exit in phases,” he said.
Ajudua also noted that the deplorable state of corporate governance which resulted in the exit of three board members including the chairman and company secretary raises a great concern for shareholders.
- “We call on the regulator to conduct an independent & forensic investigation into the affairs of PZ, its audited annual report & tax remittances to the appropriate govt agency.
- As shareholders of PZ Cuson, we reject the proposed buyout of minority shareholders for N21.
- Any amount below N100 per share is completely unacceptable to the Nigeria shareholders and will be resisted appropriately,” he said.
The National Coordinator, of the Independent Shareholders Association of Nigeria (ISAN), Mr. Moses Igbrude also in an exclusive chat said the situation where big companies and multinational companies are delisting from the market is a fundamental flaw in the market and raises concerns and questions need to be asked.
- “We need to know what is happening to the market that is making more firms opt to delist the NGX and discouraging others not to list.
- We are calling on SEC, NGX, and other regulators to organize a stakeholder meeting to find answers and solutions to the rising spate of delisting, or else more firms will quit, and our stock market will become a ghost of itself.
- They should proffer solutions on what to do to retain and encourage both multinationals and local firms to quote in the market. They should look at whether it is the cost of listing or regulatory compliance that is driving them away.
- If it is regulatory compliance that is making them delist, then it means that limited firms are doing things that are not right because compliance makes companies transparent and accountable.
- The government needs to monitor both the quoted and limited companies for appropriate disclosures,” he said.
Igbrude noted that there should be clear and spelt-out incentives for listed companies, adding that one of the major issues in the country is that limited companies have more leverage than listed firms either in terms of taxation or other requirements.
He stated that the business environment is hostile and because the government pays less attention to limited companies in terms of proper monitoring, listed firms are attracted to quit the NGX and go limited.
Igbrude said an offer price of N21 per share for minority shareholders is not encouraging and not acceptable.
- “Over the years they have used our money to grow the business and they are now offering us peanuts; it is not acceptable.
- One of the options we are considering is going to court to challenge this proposal, but we need to first watch the unfolding developments,” he said.
Igbrude called on the government to promulgate a law to ensure that core investors in any company are not allowed to have more than 51% equity.
- “With more than 51% equity holding, they can run a company aground and seek to exit with peanuts to shareholders,” he said.
I agreed with you. NGX need urgent review of their rules and policies that may be discouraging companies from listing and encouraging more delisting. Several companies on NGX are now set to delist, this is not good for the market something must be done urgently.
I agree with the point that many unlisted limited liability companies seem to be outcompeting these hitherto large listed firms that had been in the country for decades. From my observation, many of these unlisted entities have much more agility and much lower overhead costs which makes their product offerings much more market driven and price competitive. Although I do not know if there are listing requirements contributing to the troubles of listed companies, I agree with the individual who hinted that several unlisted limited liability companies get away with several practices for which listed firms are highly scrutinized. For example, several of these unlisted firms, despite doing almost as much turnover as listed firms, do not offer a living wage system for most of their indigenous workers as well as not making adequate investment for workers’ safety and welfare.
What is in a stock market that cannot [rovide funds to listed entities. When last was a successful IPO issued through the stock market. It is an aberation for listed companies to rely more on private placement to raise funds. The simplest of rules, investors find it hard to abide. Hence, you see the unclaimed dividend fund consistently rising. Most investors are not willing to accept the shananigans of the registrars. Instead they will rather invest in ponzi schemes than being tossed around. Above all, government economic policies have pauperized more Nigerians that investment is the last option on peoples agenda
PZ Cussons was publicly listed on the Nigerian Stock Exchange in 1972; selling 40% of its shares to the Nigerian public, additional 20% was sold in 1977. The company benefitted immensely from loyal patronage of Nigerians and acquired assets all over Nigeria. Suddenly, on the 30th of August, 2023 the company announced its intention to de-list the business from the Nigerian Stock Exchange and offering to buy out the minority shareholders of PZ Cussons’ 27% stake of the company at N21 a piece; citing foreign exchange challenges and devaluation of the Naira. After an intense pressure by the affected minority shareholders, the company increased the buyback amount from N21 to N23 on the 10th of November, 2023.
With the given reason by PZ Cussons above, i.e. foreign exchange challenges and Naira devaluation, every other company can now dispossess their minority shareholders, by running their companies aground and pay peanuts and get up and leave!
In preparation to rip off the minority shareholders, the company fraudulently engaged in disposal of its assets to pay shareholders dividends rather than pay from operational profit, thereby planning their exit in phases; for instance, part of the factory land at Ikorodu, Lagos was sold to Friesland Campina at N2.12 billion and from there paid a dividend. Similarly, the following year the company disposed of non-core assets with a consideration of N9.84 billion and from there also paid dividends.
SEC [Security Exchange Commission] as the regulatory authority must wade in to salvage this matter to avert subjecting the Nigerian Financial Institutions to all sorts of ridicules and save the Nigerian citizens whose investment is at stake.
The recent Central Bank of Nigeria’s (CBN) role in seeing that Nigeria triumphed in respect of the Process & Industrial Development (P&ID) $11 billion suit against Nigeria, underscores the importance the regulator attaches to ensuring that the country is not defrauded through phony contracts. In the light of the above, the Security Exchange Commission (SEC) should emulate the CBN and ensure that a holistic, forensic and independent investigation is carried out into the affairs of PZ Cussons and its audited annual report and what caused the company to declare a sudden whopping N38.6 billion loss as at First Quarter Ended 31st August, 2023.
If the majority shareholders could defraud the minority shareholders and delist and leave, the Nigerian Exchange is doomed for failure. We therefore urge the Security Exchange Commission, SEC to do the needful and investigate the PZ Cussons affair for the interest of the stakeholders of the Nigerian Exchange.
If the regulator did not wade in swiftly and decisively, other companies may follow the same route and the devastating impact to the Nigerian Exchange can only be imagined.