Scangroup locked in Ogilvy’s Nigeria shareholder row
Mr Bharat Thakrar, the CEO of Scangroup. Photo/File
What you need to know:
Nigeria’s Prima Garnet Communications has enjoined Scanad Nigeria, a subsidiary of Scangroup, in a legal battle with Ogilvy Africa
It accuses Scanad Nigeria of having an interest in the Kenya-based firm and a breach of their exclusive dealership.
Ogilvy Africa terminated its exclusive partnership with Prima Garnet in December while Scanad Nigeria started operations in Lagos in October — which the Nigerian investors says amounted to insider competition.
Scangroup has been sued by a Nigerian investor over the termination of an agency partnership that is alleged to be linked to the listed firm’s new operations in Lagos.
Nigeria’s Prima Garnet Communications has enjoined Scanad Nigeria, a subsidiary of Scangroup, in a legal battle with Ogilvy Africa, which it accuses of having an interest in the Kenya-based firm and a breach of their exclusive dealership.
Ogilvy Africa terminated its exclusive partnership with Prima Garnet in December while Scanad Nigeria started operations in Lagos in October — which the Nigerian investors says amounted to insider competition.
The Nigerian investor reckons that they agreed with Ogilvy that neither of them would enter into new alliances while their partnership was alive — offering fresh challenges to Scangroup whose pursuit of the market has previously been unsuccessful.
Scangroup intended to take a stab at the West African market in 2007 through Nigeria, but a deal with a local investor collapsed.
“Prima Garnet claims in its suit that Scanad Nigeria Limited was established by Ogilvy in breach of an affiliation agreement,” said a source familiar with the legal proceedings coming for mention next month.
“Ogilvy intends to vigorously contest that claim that any breach of contract has occurred. Scanad Nigeria has also filed a defence that it is not a party to the affiliation agreement and that the suit should be dismissed.
Bharat Thakrar, the CEO of Scangroup, declined to comment on this story.
Scangroup bought 51 per cent Ogilvy Africa in 2010 in cash and stock transactions worth $2.3 million that gave it minority stakes in eight media agencies across South and West Africa of between 6.4 and 15.3 per cent.
These agencies included Prima Garnet in which Ogilvy Africa had a 12.57 per cent stake, earning Scangroup an indirect six per cent ownership.
Prima Garnet had been serving Ogilvy’s clients like Airtel, but this will end on April 1 after the Nigerian firm was issued with a termination notice on December 17. The Nigerian firm sought an injunction on December 19 and sued Scanad Nigeria and Ogilvy.
The Nigerian market does not only give Scangroup a direct interest in Africa’s second-biggest economy, it also gives the agency larger foothold of the West African market.
Nigerians Rufai Ladipo and Abiodun Mesharck have been appointed CEO and head of media of Scanad Nigeria while Sameer Ambegaonkar, former managing director of Scanad Kenya, is the managing consultant.
Scangroup profits grew 42 per cent in 2011 to Sh911.1 million and its share price has gained 70 per cent over the past year to close at Sh65 on Friday.
