PZ Cussons Nigeria Plc (PZCN), a leading consumer goods company, has made a significant move in its ongoing acquisition saga.
Following intense negotiations and shareholder resistance, PZCN announced an increased offer for its shares from the original N21 to N23 per share.
PZ had announced in September that it plans to acquire the shares held by all the other shareholders of PZCN, subject to prevailing market conditions, at an offer price of N21 per share. It cited the need to strengthen its operations in Nigeria as a reason.
- “In their offer, the PZ Cussons Group explained that they believe the transaction is necessary in order to enable them to significantly simplify and strengthen operations in Nigeria creating the foundations for the Nigerian business to deliver against its strategy, building a more agile and innovative business, and noted that PZ Cussons has been present in Nigeria since 1899 and expects Nigeria to remain an important market for the Group for many years to come.”
PZ Cussons (Holding) Limited owns 73.27% of the company’s 3.97 billion shares and will thus pay around N24.4 billion to acquire the remaining 26.7% shares owned by minority shareholders of the company.
PZ Cussons plans to delist
In a landmark announcement on September 4, 2023, PZ Cussons (Holdings) Limited, the majority shareholder, proposed to acquire all shares held by minority shareholders at ₦21 per share, subject to market conditions.
- However, this initial offer was met with considerable resistance from minority shareholders, who deemed the price inadequate.
- Nairametrics’ exclusive interactions with these shareholders revealed a consensus to challenge the offer in court to secure a fairer valuation of their investment.
Amidst this backdrop, the Board of Directors of PZCN, with advice from financial experts and an independent fairness opinion, revisited the offer. Following robust discussions with the Core Shareholder, the decision to increase the offer price to ₦23 per share was reached. The Board now endorses this revised offer, believing it offers fair value to minority shareholders.
Offer Implementation Details
The acquisition is set to be carried out through a Scheme of Arrangement, conforming to section 715 of the Companies and Allied Matters Act, No.3 of 2020, and other regulatory frameworks.
- A general meeting of shareholders has been sanctioned, pending approvals from the Securities and Exchange Commission and the Federal High Court.
- This Court Ordered Meeting will finalize the terms and agenda, with shareholders receiving detailed scheme documents beforehand.
PZCN’s Financial Struggles
The decision also mirrors the broader financial challenges PZCN faces, particularly in securing foreign currencies for trade debts and reliance on the PZ Cussons Group for financial aid.
- The Company’s deteriorated net asset position, detailed in the Abridged Unaudited Report for Q1 ended August 31, 2023, underscores the urgency of this acquisition for its fiscal stability.
- The revised offer price represents a 35% premium over the company’s share price of ₦17 on August 17, 2023.
- PZ Share Price closed at N21.05 as of November 9th, 2023.
Meanwhile, PZCN reported a staggering N44.5 billion exchange rate loss for the first quarter of the new financial year ending August 2023.
- This revelation came to light in its latest group financial statements, which laid bare the acute impacts of forex unification on the financial health of corporations.
This substantial exchange rate loss has had a pronounced effect on PZ Cussons’ finances, plunging the company into an operating loss of N40.2 billion for the period in question.
