Merali parts ways with Bridgestone

Billionaire businessman Naushad Merali is set to acquire the 15 per cent shareholding held by Bridgestone in NSE-listed tyre maker Sameer Africa, signalling a possible end of partnership with the American company.

Mr Merali, through his investment vehicle Sameer Investment that currently owns 57.24 per cent of Sameer Africa, will hold a cumulative 72.14 per cent, of the tyre manufacturer on conclusion of the deal.

Analysts at Standard Investment Bank (SIB) estimated the transaction to be worth Sh207 million or Sh5 a share.

In the latest annual report, Sameer Africa managing director Allan Walmsley complained that Bridgestone had cost the Kenyan firm sales last year as a significant 34 per cent of the orders were not delivered — pointing at difficulties in the two companies’ partnership.

“Production difficulties at Bridgestone and challenges with supply pipeline management continued to impact adversely in 2012, and translated to an average fill rate of only 66 per cent against order,” said Mr Walmsley in the Sameer Africa 2012 annual report.

Mr Merali had not responded to our request for comment by the time of going to press, while his management team declined to discuss the transaction.

“The relationship was sort of severed a while back. Bridgestone wasn’t contributing much to the company and this announcement has been just on the way for quite a while,” said Eric Musau, senior research analyst at SIB.

Sameer Investment has sought an exemption from the Capital Markets Authority from having to take over the company following the acquisition. The transaction is intended to be done privately.

With the exit of Bridgestone as shareholder, Sameer Investment intends to collaborate with an undisclosed partner to help in technical advice. The partner will acquire some stake in Sameer Investments. It is not disclosed whether the same 15-per cent stake bought from Bridgestone will be the same to be sold to the technical partner.
Such a partner is expected to be another tyre-manufacturing firm with a global reach. It also would mean that the local entity would sell the foreign firm’s products locally in a franchise arrangement as was the case with Bridgestone.

“We, Sameer Investments Limited hereby announce to the public that on October 29, 2013, we served on Sameer Africa Limited our notice of intention to acquire all the 41,485,056 ordinary shares held by Bridgestone Corporation in the capital of Sameer Africa Limited,” said an announcement made by the board of directors Wednesday.

READ: Merali announces acquisition of Bridgestone shares in Sameer Africa

Sameer Investments is an investment company in the Sameer Group of Companies with Mr Merali owning 25.22 per cent, Yana Developers Limited 50.39 per cent, Yana Towers Limited 19.39 per cent and Grange Limited five per cent.

To buy the 41.5 million shares, Sameer Investment is to offer cash at a price which will be the 41,485,056 shares multiplied by the volume-weighted average closing price of the shares of Sameer Africa traded on the NSE for each of the 90 trading days immediately prior to the date of when all the sale conditions are satisfied.

This means that the 90 days will running only after both parties are satisfied that the conditions are fulfilled. It is expected that the proposed acquisition will be completed no later than end of December. The date may be extended by mutual agreement of Sameer Investments and Bridgestone.

Sameer Investments Limited, a Kenyan company, first purchased shareholding from Firestone Tyre and Rubber Company, which was bought by Bridgestone Corporation in 1988. Sameer Investments retained its shareholding in Firestone East Africa 1969 Limited and the company was listed on the NSE in 1995.

Ten years later, the company’s corporate identity changed to Sameer Africa Limited, an independent tyre producer based in Kenya that aims to supply its products to the East Africa and Common Market for Eastern and Southern Africa.

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