The Battle Of Big “Boys” In Corporate Nigeria: Who Wins? 

_{^{By Babajide Okeowo}}

In recent times, there have been attempted takeovers of blue chip companies in the country triggering a rash of controversies, mudslinging, and cold battles between deep-pocket investors.

In 2013, Access Bank Plc completed one of the most-talked-about takeovers in the industry when it acquired Intercontinental Bank thereby incorporating intercontinental bank and all its assets to Access Bank Plc a deal which prompted the then former managing director of Intercontinental Bank, Erastus Akingbola, to petition the Federal Government alleging a forceful takeover of the bank.

Not done, the top-tier bank in 2019 also received shareholders’ approval to take over rival Diamond Bank in a $235m deal.

A few weeks ago, the financial institution again entered into various pacts with Standard Chartered Bank to acquire the British Bank’s subsidiaries in four African markets. Earlier, the bank also announced the completion of the acquisition of majority equity in Angolan entity, Finibanco Angola S.A in a notice filed on the Nigerian Exchange Limited.

The corporate eco-system in Nigeria has been replete with tales of takeovers.

Reacting to this, Johnson Chukwu, the Group Chief Executive Officer 9GCEO) of Cowry Assets Limited, he disclosed that Access Bank Plc has shown its capacity and determination to emerge as the dominant player in the financial market space in Africa.

“Access Group has become the most aggressive financial institution in the country and at the rate that they are going, they will soon become the dominant market player in Africa. They are likely going to start challenging the ABSA of this world in terms of market size.

I am not sure that there are many banks that have more spread across Africa than Access Bank” he started.

Perhaps, the biggest takeover that would have shaken the corporate landscape in Nigeria was that between billionaire businessmen Tony Elumelu and Femi Otedola for the soul of Transnational Corporation (Trancorp Plc).

The development sent Transcorp shares soaring within a week as news of Femi Otedola’s acquisition campaign broke.

The share later dipped when the Chairman of the company, Tony Elumelu, bought back the stocks at a premium. Retail investors who bought into the company on Otedola’s interest were left in limbo.

The duo engaged in a bitter and acrimonious fight that alienated the once two jolly budding friends and businessmen who resorted to throwing shades at each other.

Speaking on the development, Chukwu described it as a contest of pride as both could have existed as shareholders instead of trying to buy-each other out.

“For me, it is a contest of pride because the two of them could have co-existed as shareholders in Transcorp they should have brought in their wealth of experience and network of connections to even further the business interest of that company instead of the unnecessary contest of who would be the core investor” he disclosed.

A major takeover bid is currently playing out in the country for the soul of the country’s premier and leading financial institution, FBN Holdings Plc, with three of Nigeria’s top investors – Hassan Odukale, Oba Otudeko and Femi Otedola – locked in a battle for a forceful takeover and throwing in all their strength.

Oba Otudeko in the last few weeks through an affiliate company of Oba Otudeko’s Honeywell Group acquired 4,770,269,843 shares of the firm in a cross deal worth N87.8 billion.

These shares which Otudeko bought at N19 per unit are the largest volume of First Bank shares traded in a single day since 2012, when the stock exchange started publishing data. The acquisitions took his shareholding to 14 percent of the bank’s outstanding market value.

A “disclosure of shareholding” sent to the Company Secretary, FBN Holdings Plc and dated July 7, 2023, by Honeywell Group Limited stated: “We write on behalf of Barbican Capital Limited, an affiliate of Honeywell Group Limited and refer to the provisions of Sections 119 and 120 of the Companies and Allied Matters Act 2020 (as amended).

“In addition to the previously disclosed interests by Honeywell Group Limited’s affiliates, kindly take this as notification that, as at 7th July 2023, Barbican Capital Limited has acquired an aggregate of 4,770,269,843 shares in FBN Holdings Plc. Kindly accept the assurances of our highest regards. Yours faithfully, Yewande Giwa Head, Governance & Sustainability.”

Otudeko, who was chairman of First Bank until 2019, is making a swift comeback to become the single largest shareholder of the bank.

Billionaire Otedola became the bank’s single largest shareholder in 2021 after a tussle with Hassan Odukale who was also vying for control of the bank after a leadership gap emerged from Otudeko’s exit.

“Otudeko is flush with cash from the sale of Honeywell and is buying back the bank’s shares through entities linked to him,” a source familiar with the matter said.

With Otudeko now leading the battle for the control of First Bank of Nigeria Holdings Plc with 14 percent shareholding, Otedola drops to second with nine percent shareholding. Hassan Odukale and Mike Adenuga are joint third, each with seven percent shareholding. Saheed Arisekole is fourth with five percent shareholding.

This attempted takeover of FBN Holdings has triggered a chain of reaction with Ecobank Nigeria Limited demanding the rejection of the recent acquisition of FBN Holdings shares by an entity associated with Oba Otudeko.

The Bank premised its objection on an outstanding “humongous indebtedness” by the company and its founder, Dr. Oba Otudeko.

In the letter to FBN Holdings, Kunle Ogunba, lawyer of Ecobank, accused Otudeko of “diverting his assets and that of the Honeywell Group of Companies through the said Barbican Capital Limited, in order to frustrate the enforcement of the judgment of the Supreme Court against him and the Honeywell companies, towards recovering his/their undisputed indebtedness to our client”.

“We, therefore, demand that you respectfully reject the approval/consent/registration/ratification {howsoever described or in whatsoever manner of the shares bought by the said Barbican Capital Limited held via the afforested entities, as proceeding with such approval/registration will be tantamount to assisting in the diversion of funds/assets meant for the payment of the debt which has been affirmed by the Supreme Court,” Ecobank’s lawyer said in a letter dated July 7, 2023.

A few days after Ecobank’s letter to FBN Holdings, a federal high court sitting in Lagos awarded damages of N72.2 billion to Honeywell Flour Mills  (HFMP) Plc in its eight-year legal battles with the bank.

In a judgment delivered by Justice Mohammed Liman, the court granted all the reliefs sought by Honeywell over the freezing of its accounts by the bank in November 2015.

Ecobank had been granted an ex parte order to freeze Honeywell’s accounts in an attempt to wind up the company over its liabilities to the bank.

The ex parte order was granted with the condition that Ecobank would indemnify Honeywell’s over any losses.

The order was varied by the court of appeal in December 2015, but a dissatisfied Ecobank headed for the Supreme Court where it also lost.

Honeywell then approached the high court to claim N72.2 billion in damages against Ecobank for the losses it suffered while the freezing order was applied to its accounts.

The claims made by HFMP include losses due to foreign exchange devaluation, interest on unutilised cash balances, loss of revenue, and aggravated and exemplary damages.

In his judgment, Liman granted all reliefs sought by Honeywell.

“The plaintiff was denied the use of funds in his account based on the ex parte order granted in favour of the defendant. It is therefore my firm view that the plaintiff (Honeywell) is entitled to the amount claimed… The argument of the defendant in his written address is therefore not acceptable as the contents of the document are the best evidence and they speak for themselves,” he said.

Meanwhile, Ecobank Nigeria Limited has also disclosed that it would appeal the judgement by the Federal High Court in Lagos, presided over by Hon. Justice Liman.

The bank said it believes that the judgment is perverse and cannot stand the test of time. It also noted that it would vigorously challenge same, and remain confident that it can reverse this judgment at the higher courts.

Speaking on the issue of hostile takeovers, Mr. Sola Oni, Chief Executive Officer, Sofunix Investment and Communications Limited Sola Oni urged the market regulators to beam their searchlights on the behind-the-scenes hostile takeovers of quoted companies in Nigeria

“There is no doubt that the battle for controlling shares in a company is a double-edged sword. It can increase the fortune of shareholders by way of capital appreciation or decrease it by share price depreciation, depending on the investment decision of the corporate raider at any given point.

As part of its rebranding, Securities Exchange Commission SEC has to put its house in order by reviewing all such outstanding sleazy offers and bring the promoters to book. This is the minimum the Commission can do to restore investor confidence in the market. Innocent shareholders deserve adequate regulatory protection from those who indulge in hostile takeover by subtle means” he said.

On his part, the National Coordinator of Progressive Shareholders Association, Dr Boniface Okezie does not see anything wrong in attempting to take over any company in the country as long as the investor has the required fund.

He disclosed to MMS Plus that this is why it is called a Capital Market.

The market is open to every Nigerian, that is why it is called a market . If you have the funds you can as well outweigh each other by moving by force to buy whatever you can buy to stay on top that is why it called a capitalist market  in the first place.

You don’t have to give notice to NGX before you move in, yes, that the shares are listed on their platform and they regulate it doesn’t mean that whoever wants to buy need to contact them.

The buyer’s contract is with the stockbroker who goes to the market and buy what is available in the market to his clients’ order, when the deal is struck the regulator will cross-check that who’s buying is genuine and that the money involved is paid to settle the owners of the shares involved in the offer and the money in question  is not laundered funds.

In this case, everyone knows the two major players in this case, they are already in the markets and they play deep in it, they ‘re not strangers.

Speaking on the danger or benefits to investors and shareholders in the event of a hostile takeover, Okezie said;

“What benefits shareholders is that the little they have there is valued by the entrant of these big players. That is the beauty of the market by the time information filters out there is a heavy movement on that equity, and the price goes up, if the stocks have been down for long people will have the opportunity to sell off and take their profits as it did happen in Transcorp Plc as well FBN Plc what else does one want, either you reap from capital appreciation or dividends that is it.

There is nothing like a hjiack or hostile takeover there is a willing buyer and willing seller, you pay all the necessary fees that accrued on the transactions that is it” he said.

Johnson Chukwu still expects more fight between the men battling for the soul of BN Holding.

“I wouldn’t say the fight is over, what I would say is that the two contestants have refused to throw in more money into the ring.

Investors are thinking that these two men will come to the market and start mopping up shares and the price will go up then, they realize that those men are not going to do that.

I feel like if you want to take over a stock, you don’t do it when the market value is high, you take it when the market is tanking.