Reports that minority shareholders of Unga Group #ticker:UNGA have rejected an American firm’s bid to acquire an additional 46.1 per cent stake in the firm did not surprise many.
This is because the buyout offer by Delaware-based Seaboard Corporation of Sh40 per share has valued the miller at Sh3.1 billion, which is 18.8 per cent below the firm’s book value of Sh3.7 billion or Sh49.2 per share as of June 2017.
We opine that the Capital Markets Authority must step in and protect the interests of the minority shareholders.
In any transaction, the interests of every shareholder must always be taken into account.
The fact remains that the bid is an attempt to sell a publicly traded company on the cheap without taking the interests of all shareholders into consideration.
Unga Group’s minority shareholders have a right to complain that the offer by the American firm had grossly undervalued their company.
They have even teamed up to consider various options, which include making a rival bid and going to court.
We urge the major stakeholders in the transaction to sit down and ensure that each and every investor’s interests are taken into consideration.
Any takeover deal should not be seen as only aimed at meeting the aspirations of the majority owners while ignoring the small investors.
For example, long-term shareholders who bought the stock in the first eight months of 2015 when its price averaged Sh44.2 will be the biggest losers if the deal is approved in the current form.
It is a well-known fact that when any investor buys a firm’s share, the ultimate goal is always getting a good deal at the end. This should not be any different for the small investors.
There are lessons to be learnt from past deals. A 2013 bid by two British brothers to buy Rea Vipingo for Sh1 billion flopped and they were forced to more than double the offer after rival bids from other suitors.
The majority shareholders in Unga Group should listen to the minority investors.
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