Puma drops bid to acquire KenolKobil

KenolKobil chief executive Jacob Segman. Puma Energy has dropped its bid to acquire oil marketer KenolKobil, scuttling the company’s growth ambitions. Photo/File

Puma Energy has dropped its bid to acquire oil marketer KenolKobil, scuttling the company’s growth ambitions.

In a statement to newsrooms, Kenol’s chairman Jacob Segman said the company’s negotiations with Puma have been terminated but did not give the reasons for the new development.

“The negotiations with Puma Energy regarding a potential acquisition of control in (KenolKobil) have been terminated,” he said.

Mr Segman added that the company shall continue pursuing strategic alternatives for the company to support its growth in Central, Eastern, and Southern Africa.

KenolKobil was betting on the Switzerland-based Puma to bring in more capital and expertise to help the company grow its business in the region’s downstream oil business.

The collapse of the deal means that KenolKobil has to find another strategic partner or carry on with the ambitious growth plans on its own.

Kenol has in the past decade made a series of acquisitions and Greenfield projects in the region and now has operations in Kenya, Uganda, Tanzania, Rwanda, Ethiopia, Burundi, Zambia and DRC Congo.

Its major shareholders were betting on the multi-billion-shilling deal to exit their decades-old investment in the company at a premium but will remain in the oil marketer until they find a new acquirer.

Cancellation of the deal comes after the government’s recent move to introduce a 20 per cent tax on assignment of rights, sale of business or takeovers in the oil and mining industry.

(Read: New tax on oil firms clouds KenolKobil-Puma deal)
This would have potentially raised Puma’s cost of acquiring KenolKobil though uncertainty remains over whether the tax is confided to the exploration stage or is applicable to oil marketing business like KenolKobil’s.

The deal had also been temporarily stopped by the courts after the oil marketer’s employees filed a suit to block their retrenchment which they linked to the acquisition.

Cancellation of the takeover is likely to have an impact on KenolKobil’s shares, with the board of directors advising the investing public to exercise caution when trading the stocks.

(Read: KenolKobil share falls by 9pc on high investor sales)
The firm’s share price has gained 16.8 per cent in the past one year to trade at Sh13.2 despite posting a massive Sh3.8 billion net loss in the half year ended June 2012.

The firm also issued a profit warning for the year ended December, with the stock rally linked to speculation among some investors after the deal was first announced in May 2012.

Analysts at Kestrel Capital had indicated that Puma would have bought KenolKobil’s shares at between Sh20.1 and Sh21 each, implying more than two-thirds premium over the Sh12.5 market price in the weeks following the announcement.

Puma had said it would buy the stakes of majority shareholders and thereafter seek to acquire the entire shares of KenolKobil.

“Should the transaction proceed, Puma Energy would comply with the requirements of the regulations under the Capital Markets Act, and contemplates making a Take-Over offer to acquire all the shares in the Company in accordance with those regulations,” Puma said in an earlier statement.

PAYE Tax Calculator

Note: The results are not exact but very close to the actual.