CMC Chairman Joel Kibe (left) and top shareholder Peter Muthoka. Mr Kibe has announced an acquisition bid for the motor dealer. FILE
What you need to know:
CMC has informed capital markets regulator of the acquisition plans.
Chairman Joel Kibe on Tuesday told shareholders at an AGM held in Nairobi that several multinationals had expressed interest in buying the company.
Mr Kibe said the company will call for an extraordinary general meeting (EGM) where shareholders will deliberate on the best offer made.
CMC Holdings is the target of a takeover bid by multinational vehicle distributors that could see the auto dealer de-list from the Nairobi Securities Exchange in the course of the year.
Chairman Joel Kibe on Tuesday told shareholders at an AGM held in Nairobi that several multinationals had expressed interest in buying the company and are preparing to make an offer.
The acquisition bid comes at a time when the company’s shareholders are weighing their options as the company emerges from bitter boardroom wrangles and reduced profitability.
“We have received takeover offers from several global vehicle distributors who are conducting due diligence on our company,” Mr Kibe told shareholders without giving details.“We are going to negotiate and ensure that you get a good offer price.”
The chairman added that talks are at a preliminary stage and that the acquiring firms could either seek a majority stake in CMC or buy the entire stock of the auto dealer.
CMC wrote to the Capital Markets Authority last week informing the regulator of its potential acquisition. The firm’s major owners, including top shareholder Peter Muthoka, are in favour of the deal.
The shareholders, including current directors and former chairman Jeremiah Kiereini, control a 62.9 per cent stake in the firm, which gives them power to push through the deal.
Mr Kibe said the company will call for an extraordinary general meeting (EGM) where shareholders will deliberate on the best offer made.
The shareholders are expecting the stock to resume trading in the next few months. But the markets regulator has had the tendency of suspending shares of companies that are takeover targets, such as with AccessKenya, signaling that CMC’s shares may take longer to return to the market.
But analysts say the disclosure of the takeover bid may save the dealer’s share price from taking a nosedive when the stock resumes trading.
“A takeover of a company that has gone through a challenging period like CMC offers optimism for shareholders,” said Eric Musau, an analyst at the Standard Investment Bank.
“Investors may decide to hold on to their shares in light of the new information,” he said.
Mr Musau, however, added that not all takeover talks lead to an offer being made and that CMC’s shareholders will have to weigh in this risk in their decision-making.
Puma Energy, for instance, recently dropped its bid to acquire KenolKobil, causing a sharp fall in the oil marketer’s share price that had rallied as investors had expected their shares to be bought at a premium.
Some of the risk factors faced by the investors seeking to takeover CMC include the loss of the Jaguar Land Rover franchise which contributes up to 23 per cent of the dealers sales annually.
