CMC buyout ends as Al-Futtaim pays owners Sh7.5bn

CMC Holdings has been bought by a Dubai company Al-Futtaim for Sh7.5 billion. Photo/FILE
CMC Holdings has been bought by a Dubai company Al-Futtaim for Sh7.5 billion. Photo/FILE 

Shareholders of CMC Holdings have finally been paid by a Dubai firm after a Sh7.5 billion buyout that has effectively seen the auto dealer delist from the Nairobi Securities Exchange.

A former major shareholder of CMC told the Business Daily that Al Futtaim wired the money to majority of CMC shareholders on Tuesday afternoon.

He said only a small number of shareholders are yet to be paid and this was due to inaccurate details—including bank account numbers—that needed to be corrected before settlement could be effected.

“Al Futtaim made nearly all the payments. The acquisition is now concluded,” said the source who cannot be named without compromising his position.

The payments have ended a long wait for CMC investors who have endured three years without dividend amid reduced profitability, franchise losses and a bitter boardroom war that was only settled in February last year.

CMC shareholders were bought out at Sh13 per share, representing a 3.7 per cent discount over the last trading price of Sh13.5 in September 2011.

Analysts led by Aly Khan Satchu of Rich Management, however, termed the buyout price generous in light of the firm’s reduced profitability and loss of the flagship Jaguar Land Rover to RMA Kenya last year.

“I think Sh13 in the hand is a compelling offer that is priced to clear,” Mr Satchu said when Al Futtaim disclosed its bid.

CMC now joins Internet firm AccessKenya on the list of companies that have gone private following majority acquisition deals, reducing the volume and variety of shares available to traders at the Nairobi bourse.

AccessKenya was fully acquired last year by South Africa’s Dimension Data for Sh3 billion or Sh14 per share.

Al Futtaim has also bought out all CMC shareholders including the minority who disputed the acquisition process that opened in December.

The Dubai firm received buyout acceptances from CMC shareholders controlling 91 per cent in March, achieving the 90 per cent threshold that allowed it to proceed with the compulsory acquisition of the balance.

Businessman Peter Muthoka was the biggest beneficiary of the buyout, earning Sh1.8 billion for his 24.7 stake in the country’s fifth-largest auto dealer.

Mr Muthoka gradually accumulated CMC shares from early 2000s through his logistics firm Andy Forwarders, which serves a number of blue chip clients such as Tata Africa and General Motors East Africa.

Former long-serving CMC chairman Jeremiah Kiereini earned Sh947 million for his 12.5 per cent stake.

Business associates Paul Ndung’u and Joel Kibe, who retains CMC chairmanship, got over Sh1 billion for their combined interest of over 12 per cent in the auto dealer.

Other major beneficiaries of the sale include businessman Ashok Shah who received Sh39.6 million for his 2.61 per cent stake and former Attorney-General Charles Njonjo who earned Sh10.1 million for his 1.32 per cent stake.

Al-Futtaim says it has bought CMC to get an entry into the regional consumer market, adding that it will expand its interests beyond the automotive sector to include retail and real estate ventures.