Infostride News has reported a pivotal development in the ongoing acquisition saga involving PZ Cussons Nigeria Plc (PZCN), a prominent consumer goods company. In a move reflecting the company’s commitment to fortify its operations in Nigeria, PZCN has increased its offer for shares from the original N21 to N23 per share, aiming to acquire the shares held by minority shareholders.
The initial announcement in September outlined PZCN’s intention to acquire shares from other stakeholders, emphasizing the importance of streamlining and strengthening operations in Nigeria. The company, present in Nigeria since 1899, envisions the Nigerian market as a vital component of its long-term strategy.
PZ Cussons (Holding) Limited, the majority shareholder owning 73.27% of the company’s 3.97 billion shares, is set to pay approximately N24.4 billion for the acquisition of the remaining 26.7% shares held by minority shareholders. This move is aligned with PZCN’s objective to delist, as revealed in a significant announcement on September 4, 2023.
The initial offer of ₦21 per share faced resistance from minority shareholders who deemed the price inadequate. Exclusive interactions conducted by Infostride News with these shareholders indicated a unanimous decision to challenge the offer in court, seeking a fairer valuation of their investment. In response, the Board of Directors of PZCN, in consultation with financial experts and an independent fairness opinion, revisited the offer.
After extensive discussions with the Core Shareholder, the board decided to increase the offer price to ₦23 per share. This revised offer is now endorsed by the Board, as it is believed to provide fair value to minority shareholders.
The implementation of the acquisition will follow a Scheme of Arrangement, adhering to section 715 of the Companies and Allied Matters Act, No.3 of 2020, and other regulatory frameworks. A general meeting of shareholders is pending approval from the Securities and Exchange Commission and the Federal High Court. The Court Ordered Meeting will finalize the terms and agenda, with shareholders receiving detailed scheme documents in advance.
The decision to increase the offer price also reflects the broader financial challenges faced by PZCN, particularly in securing foreign currencies for trade debts and the company’s dependence on the PZ Cussons Group for financial assistance. The Abridged Unaudited Report for Q1 ending August 31, 2023, highlights the urgency of the acquisition for fiscal stability.
The revised offer price, standing at a 35% premium over the company’s share price of ₦17 on August 17, 2023, signifies a strategic move to address the financial struggles. As of November 9th, 2023, PZ Share Price closed at N21.05. The financial challenges are further underscored by a staggering N44.5 billion exchange rate loss reported by PZCN for the first quarter of the new financial year ending August 2023.
This revelation, disclosed in the latest group financial statements, elucidates the severe impacts of forex unification on corporate financial health. The substantial exchange rate loss has resulted in an operating loss of N40.2 billion for the specified period, emphasizing the critical need for the acquisition to stabilize PZCN’s financial standing.
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