It’s bulls galore as NIPCO launches MTO for Mobil Nigeria

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.

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