Companies

CMC director in group of 7,000 owners bought out in forced exit

cmc

Former CMC chairman Joel Kibe (left) shares a light moment with former chairman Peter Muthoka. PHOTO | FILE | COURTESY

Former CMC chairman and business tycoon Joel Kibe is among nearly 7,000 minority shareholders of the motor dealing company whose shares were acquired compulsorily by Dubai-based Al-Futtaim Group.

Al-Futtaim, which recently concluded its takeover of the previously NSE-listed firm, received acceptance of its buyout offer from 91.56 per cent of the company’s shareholders, surpassing the minimum legal threshold required to allow for a compulsory acquisition of the stake held by dissenting shareholders.

The latest regulatory filings of CMC’s shareholding shows that Mobicom, an investment vehicle associated with Mr Kibe, was among the 6,978 local and foreign investors who did not respond to Al-Futtaim’s takeover offer and had to be bought out compulsorily.

“We have sold our remaining shares. It was an oversight,” said Mr Kibe in an interview, adding that the shares which he held in his name had all been taken over as per the original offer.

The businessman is a director of Mobicom Kenya Limited, which was still holding 2.7 million shares or 0.47 per cent stake in CMC worth Sh35.6 million as of June. The takeover by Al-Futtaim was concluded in April.

Mobicom’s lingering presence in CMC’s shareholders list raised eyebrows since Mr Kibe, who still sits on the board of the company, was among the motor dealers’ major shareholders who negotiated the company’s buyout and subsequently sold large blocks of shares to Al-Futtaim. At Sh13 per share takeover price, Al-Futtaim paid out a total of Sh6.9 billion to those who had voluntarily tendered their shares.

READ: The dealmaker who crafted Sh7bn sale of CMC to Al-Futtaim

The other non-responsive or dissenting shareholders were acquired in July, although it was not immediately clear whether Al-Futtaim had concluded the compulsory buyout.

The June regulatory filings show that most of these were local individuals controlling a combined 5.25 per cent stake. Local institutional investors —including Mobicom and Apex Africa Investment Bank— were second with a 2.35 per cent stake.

Foreign individuals were ranked third with 0.8 per cent stake, followed by foreign institutional investors who had 0.03 per cent equity in the motor dealer. Overall, the remaining shareholders controlled 47.2 million shares worth Sh613.6 million, an amount Al-Futtaim said it had deposited at KCB to facilitate their buyout.

“Payment to remaining shareholders… will be within 10 days of completing and submitting the duly filled claim form to KCB,” Al-Futtaim said in a mid-June notice.

The holdout could be seen as an expression of shareholders’ view that the price of Sh13 per share was inadequate to compensate investors for the opportunity cost of divesting from CMC. Inactive stockbrokerage accounts brought by death or emigration of investors have also frustrated similar buyouts before, leading to a pile-up of unclaimed assets.

Mr Kibe and his business associate Paul Ndung’u were retained as directors of CMC in a boardroom shake-up that saw the exit of directors appointed by other former top shareholders. In the reshuffle, Mr Kibe was replaced as chairman by Al-Futtaim executive Leonard Hunt but he was retained as a non-executive director. 

The businessman had earlier told the Business Daily that he would remain as chairman following the sale of CMC, although it is not clear whether this was a gentleman’s agreement rather than a contractual commitment.

Mr Ndung’u continued as a non-executive director while Mark ole Karbolo, Kyalo Mbobu, and Naftali Mogere resigned at Al-Futtaim’s request. Mr Mbobu and Mr Karbolo had been appointed by former top shareholder Peter Muthoka who earned Sh1.8 billion in the buyout.

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