Unilever Plc, United Kingdom (UK), will inject about N38 billion into its Nigerian subsidiary, Unilever Nigeria Plc under a new capital raising programme approved by the shareholders of the fast moving consumer goods company last week.
Shareholders of Unilever Nigeria at the annual general meeting in Lagos approved a proposal by the board of the company to raise up to N63 billion in new equity funds by selling new shares to existing shareholders.
In preparation for the rights issue, shareholders also increased the authorised share capital of the company to N5 billion or 10 billion shares through the creation of additional 3.95 billion ordinary shares of 50 kobo each.
Unilever UK holds 60.06 per cent majority equity stake in Unilever Nigeria through its Unilever Overseas Holdings BV. Stanbic Nominees Nigeria Limited holds the second largest equity stake of 10.43 percent in Unilever Nigeria.
An investment banker in the know of issuance processes said the board must have received provisional approval of the majority core investor before putting the resolution for new share issue forward for shareholders’ approval.
Unilever UK has shown sustained interest in increasing its majority shareholding in the Nigerian subsidiary. It mopped up additional shares through open market purchases at the Nigerian Stock Exchange (NSE) to increase its majority stake by 1.53 per cent from 58.53 per cent in 2015 to 60.06 percent in 2016. It had also made open market purchases in 2015.
Unilever UK will be required to contribute at least N37.84 billion to the rights issue to retain its current shareholding and the multinational may increase its stake by applying for additional shares from renounced rights, the investment banker said.
Unilever UK had earlier indicated it intended to acquire up to 75 percent controlling equity stake in the Nigerian subsidiary.
Unilever Uk had in first half of 2015 sought to increase its majority equity stake in the Nigerian subsidiary from 50 per cent to 75 per cent, citing the long-term strategic importance of Unilever Nigeria to its global business.
In a transaction initially valued at about N43 billion or £144.5 million, Unilever Overseas Holdings sought to increase its equity stake in the Nigerian company from 50.04 percent up to a maximum of 75 per cent by buying additional shares from minority shareholders. The tender offer sought to acquire about 942.42 million ordinary shares in Unilever Nigeria at a price of N45.50 per share in cash.
In a statement by Richard Hazell, Director, Unilever Overseas Holdings B.V, Unilever had said it was making the additional share acquisition as part of the long-term strategic plan by the conglomerate as it believes that Nigeria offers significant growth potential.
“The Unilever Group has had a major presence in Nigeria for many years and continues to believe that the country offers significant growth potential. This makes Nigeria a strategic long-term investment priority for Unilever Overseas. Globally, the Unilever Group is focused on investing in the foods, household and personal care categories and the long heritage and great brands of Unilever Nigeria in these categories in Nigeria make it attractive for Unilever Overseas to increase its holding in Unilever Nigeria, whilst maintaining its stock exchange listing,” Unilever stated in the statement enclosed in the tender offer.
Nigerian shareholders, however, largely shunned the N43 billion share acquisition bid as it recorded less than a third of its target. At the conclusion of the tender offer, Unilever UK’s total shareholdings in Unilever Nigeria only increased by 8.49 per cent from 50.04 per cent to 58.53 per cent. The increase also included open market purchases.
Under the extant laws, a 75 per cent equity stake would have given Unilever UK the overriding majority equity stake to undertake several strategic transactions including mergers, acquisitions, new capital issues and other major corporate changes with little or less resistance from Nigerian shareholders.
Source: The Nation