A torrent of mergers and acquisitions (M&A) in 2021, a year that followed the pandemic outbreak, with all its rage and devastating blow on the world economy, not only suggests the resilience of corporate Nigeria but the gritty resolve of growth-minded corporations to add weight, put the global emergency behind them and move on.
Several Nigerian firms appear to have been bitten by the bug of deal-making during the year, with the number of deals among quoted companies coming to 23, including 15 acquisitions (both outright takeovers and acquisitions of controlling stakes), three mergers and five minority stake purchases, according to PREMIUM TIMES data.
The trajectories M&A took were as varied as the firms involved, a striking dimension to doing deal last year being three reverse takeovers by three private companies targeting firms quoted on the Nigerian Exchange.
Using Refinitiv data, Financial Times estimates that global deal-making hit an unprecedented level in 2021, crossing $5.8 trillion, a trend financial journalist James Fontanella-Khan said had been fuelled in part by “the return of animal spirits to corporate boardrooms.”
Investment banks garnered as much as $157 billion record-breaking fees for midwifing deals, $47 billion coming from M&A advisory services alone, according to the news outlet.
Africa’s largest economy’s M&A market also saw a boom both in value and number of deals that possibly has never before recorded.
Deal value in Nigeria summed up to $1 billion at mid-year, said research house African Law & Business, a 267 per cent surge in value and 17 per cent jump in volume when set beside the figures for 2020, the year of the virus.
Right from the start of the year, the banking sector dominated M&A activities, the sheer bulk of the industry’s participation coming from Access Bank, which completed four acquisitions and one merger in markets as far-flung as Mozambique, South Africa, Botswana and Zambia.
The scope of Access Bank’s expansion vision seems to know no bounds, and the lender has stated its grand plan to break into markets in eight countries on the continent in its quest to become “Africa’s gateway to the world,” hoping to ride on the back of the African Continental Free Trade Area agreement.
On the strength of the latest push, the financial institution is probably the continent’s fastest-growing bank at cross-border level, given that it delivered two acquisitions in Cameroon and Kenya last year and is in line to ink more deals in the year ahead as it looks to conquer Africa.
That won the lender’s chief, Herbert Wigwe, African Banker of the Year award in June for the second year in a row.
The South African acquisition, even though it was not a complete acquisition, accounted for $60 million of Nigeria’s biggest lender by asset’s capital expenditure for the year.
“We’re basically making sure that we have a strong presence in all the major trade centres in the continent,” Mr Wigwe told CNN in December 2021.
“I think we’re on track. I think in terms of profitability our different franchises are doing exceedingly well, and I think 2022 perhaps is actually going to be a big, big year for the institution.”
But the upset of the year and perhaps the high point of doing deals in Nigeria in recent years was Titan Trust Bank’s late December launching of a takeover bid for Union Bank.
That came after the acquirer sealed a share purchase pact for an 89.4 per cent holding, a push that could put the 107-year-old Union in danger of extinction.
The reverse takeover signposted the first time a private bank in Nigeria would be acquiring a listed bank.
Largely operating in the shadow since it got a national banking permit in 2018, Titan Trust has strategically positioned itself as a challenger bank with a heart for big things, backed by Tropical General Investment Group, which in 2019 sold Chi Limited (manufacturer of Chi Exotic Juice) to Coca Cola Nigeria in a deal reckoned to be around $1 billion.
In July, the FCMB Group announced its takeover of the majority shareholding in AIICO Pensions, translating to a 60 per cent stake that came from purchasing 33.9 per cent shares from the pension firm and the rest 26.1 per cent from a set of other investors.
The financial services group already operates a pension unit FCMB Pensions Limited and would hope to firm up its footprints on the Nigerian insurance landscape with the new acquisition.
The deal-making boom also drew enormous interest and a couple of participants from the energy sector, where the unlisted firm Rainoil purchased the controlling stake of 61 per cent in rival Eterna, a quoted company.
It was perhaps the first time in Nigeria’s corporate history an outsider would be taking over a quoted company.
In a similar move, Ardova, majority-owned by billionaire oilman Abdulwasiu Sowami who himself purchased the company as Forte Oil from Femi Otedola, chair of Geregu Power Plc, in 2019, took over one of its rival Enyo, a transaction that added ninety retail outlets to the former.
Ardova’s Managing Director Olumide Adeosun said in a CNBC Africa interview that Enyo will run as a separate subsidiary s there are no plans for a business combination with Ardova.
Seplat Energy, Nigeria’s biggest oil and gas firm by market value, announced in November 2021 it is hot on the heels of the shallow water business of ExxonMobil, which has been marked for sale.
In November 2021, Nigeria’s biggest flour-maker Flour Mills of Nigeria agreed to procure a 71.7 per cent stake in its closest competitor Honeywell Flour “based on an enterprise value of NGN80 billion. The transaction also entailed a planned business combination of Flour Mills through its affiliates and Honeywell.
Flour Mills also brokered a deal with FirstBank of Nigeria Limited to buy its 5.06 per cent stake in Honeywell.
Honeywell’s majority owner Oba Otudeko has been under pressure from the Central Bank of Nigeria to repay his humongous debt said to be around N75 billion at FirstBank after he was dismissed by the watchdog in the most memorable board shake-up of the year.
In the same vein, UACN entered a pact with South African food company Tiger Brands to purchase the latter’s minority stake in UAC Foods, itself a unit of UACN. The deal would allow UACN boost its interest in the company.
In the beer-making sector, Raysun Nigeria Limited – the special purpose acquisition company of Nigerian Breweries, has disclosed it would initiate a mandatory takeover of Uyo-based Champion Breweries any time soon, having acquired a controlling stake in the target company through a series of transactions.
It plans to buy 15.3 per cent of Champion’s Breweries shares from other stockholders for the takeover to materialize.
A string of minority stake purchases was made by investors in the mobile money business of Lagos-listed Airtel Africa, which has been drawing tremendous interest since the valuation of that subsidiary alone hit $2.65 billion early in the year.
MasterCard, in November 2021, scaled up its minority stake in Airtel money by $25 million alongside TPG, a US private equity firm, and Qatar Investment Authority, each raising its interest by $50 million.
That puts the combined investment of the three companies in the wireless operator at $500 million since the start of the year.
Two weeks ago, London-based Chimera Investment LLC also acquired a minority equity stake of $50 million in the business.
The insurance industry was also caught in the whirlwind of deal-making during the year. Royal Exchange General Insurance Company said in October 2021 that AfricInvest, a pan-African investment and financial services company had acquired a minority stake in it.
“The investment was made through its evergreen private equity fund, FIVE, in the form of a subscription to a capital increase,” the underwriter said in a regulatory filing.
Towards the butt-end of the year, International Energy Insurance announced a takeover by Norrenberger Advisory Partners Limited, the underwriter having been bogged down by loss-making for nine years.
CAP Plc, a subsidiary of UACN, opened the merger market this year following the decision to forge a merger with Portland Paints Plc, also a unit of UACN, resulting in an entity that has become Nigeria’s biggest paint company.
“The proposed merger presents a compelling opportunity to create significant value for shareholders of CAP and achieve the company’s strategic growth objectives as a larger company with a broader product portfolio, more corporate-owned brands and diversified revenues,” the scheme of the merger read.
TY Danjuma’s TY Holdings Limited upped its stake in BOC Gases Nigeria Plc (until the deal majority-owned by Britain’s BOC Holdings UK) to 72 per cent in August 2021.
A name change followed in October when the moniker Industrial and Medical Gases Nigeria Plc was adopted.
Early in August 2021, Custodian Investment announced it had entered a pact with UACN Property Development Company (UPDC) for the purchase of 51 per cent of its shares.
This was followed by another disclosure by the company in May 2021, in which it stated it had received the nod of the Securities and Exchange Commission to proceed with a mandatory offer to be made to minority shareholders of UPDC for the purchase of 34.4 million shares.
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All content is Copyrighted © 2020 The Premium Times, Nigeria
