Chairman Geregu Power and Nigerian Billionaire Femi Otedola has sold off his entire shares in Transcorp Plc to Tony Elumelu, the company’s chairman and largest shareholder, bringing about a corporate truce between the two billionaires.
Sources hinted that Elumelu paid Otedola a very steep premium (much higher than the reported 400-percent) on Transcorp’s closing price on Thursday to acquire his bloc of shares, in the negotiated deal between Otedola and Elumelu.
Signs of a potential truce first came about on Wednesday when Elumelu, said he welcomed the recent interest in an indigenous company by Billionaire investor Femi Otedola, while calling him a friend.
“Femi Otedola is a very good friend and a man I admire and respect. I welcome Otedola’s investment in Transcorp and I look forward to working with him to take Transcorp to greater heights,” Elumelu said in an interview on Arise TV.
However the next day notice sent to the Nigerian Exchange Group (NGX) by Funmi Olofintuyi, acting company secretary of Transcorp Plc, said HH Capital Limited, owned by the billionaire investor, Tony Elumelu, Chairman, United Bank for Africa had acquired 9,697,189,984 units of shares of Transnational Corporation of Nigeria Plc, otherwise known as Transcorp Plc, thus bringing his total shareholding in the company to 9,991,173, 177 units, amounting to 25.58 percent of Transcorp Plc outstanding shares.
Otedola had initially acquired 2.24 billion shares, equivalent to a 5.52% stake in Transcorp Plc with investment in hospitality, power, and oil and gas sectors.
Over the weekend news broke that Otedola, has upped his interest in the conglomerate Transcorp group to 6.3 per cent, setting the market abuzz with excitement.
The acquisition suggested that the billionaire investor was likely to set the stage for a bidding war for control of one of Nigeria’s indigenous and most recognized conglomerates.
The news sent shock waves across the stock market and spurred interest in the Transcorp’s shares at the Nigerian Exchange (NGX) Limited, pushing the stock up 176% year-to-date and making it the 3rd best performer on the NGX, this year.
Otedola was keen to force a turn-around in the management of Transcorp which he saw as underperforming.
Transcorp which owns one of the largest power assets in Nigeria (the 972MW gas-fired Ughelli Power Plant) has a market capitalization of just N126.8 billion (as at Friday April 28th).
This compares with the Otedola owned Geregu Power which has a market capitalization of N807.5 billion.
Otedola bought the underperforming State owned power asset in the privatization exercise of 2013, with effective capacity of less than 100 megawatts (MW) and has ramped up its capacity to 435 MW, with 70% – 80% of power generated being fed to the grid.
Geregu Power whose shares have doubled in just 6-months recently paid out N20billion in dividends to its shareholders for Full Year 2022.
Transcorp’s stock on the other hand, had perpetually languished at the neighbourhood of N1 ($0.003) per share for years, with lacklustre dividends paid over the past few years.
Who blinks first amongst the duo ?
Femi Otedola is a man who doesn’t back down perhaps there’s a next move off Otedola’s sleeves who’s known as an “Activist Investor “.
Who are Activist investors and what’s their game ?
Their game is simple: They buy stocks they view as undervalued and pressure management to do things they believe will raise the value, such as giving more cash back to shareholders or shedding divisions that they think are driving down the stock price.