Companies

Carbacid, city tycoon bid to acquire BOC for S1.2bn

boc gases

A BOC worker prepares cylinders for refill at the company’s Industrial Area plant. FILE PHOTO | NMG

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Summary

  • The proposed transaction will result in the largest combined industrial gases business, bringing together Carbacid’s carbon dioxide operation and BOC’s oxygen and other gas products.
  • In 2005, BOC had attempted to acquire a majority stake in Carbacid as a means of entering the carbon dioxide market but the Capital Markets Authority (CMA) blocked the transaction, citing breach of terms by the proposed acquirer.

Carbacid Investments #ticker:CARB and its majority shareholder Baloobhai Patel have made a joint bid to acquire 100 percent of BOC Kenya #ticker:BOC for Sh1.2 billion, marking the latest twist in the history of the two Nairobi Securities Exchange-listed firms.

The bid by Carbacid marks a role reversal after the company was itself the takeover target of BOC in 2005 but the proposed transaction collapsed in October 2009 on regulatory roadblocks.

Carbacid and Mr Baloobhai have offered to buy BOC shares at Sh63.5 apiece.

Mr Patel is the single largest shareholder in Carbacid with a 40.38 percent stake.

He also owns a 99 percent equity in Aksaya Investments LLP, the partnership that is working with Carbacid to buy out BOC.

The proposed transaction will result in the largest combined industrial gases business, bringing together Carbacid’s carbon dioxide operation and BOC’s oxygen and other gas products.

“The co-offerors have chosen to make the offer as they believe that the combination of BOC’s product portfolio and services with Carbacid’s existing business is an excellent match that will position the enlarged group to become the East and Central African region’s supplier of choice for industrial, medical and special gases and related equipment services,” Carbacid said in a notice.

BOC’s main products are Nitrogen, Dissolved Acetylene and Oxygene which is currently in high demand in hospitals to help coronavirus patients to breathe.

Carbacid is the major producer of carbon dioxide which is used to make fizzy beverages like soft drinks.

BOC wanted to enter the carbon dioxide business through the ill-fated buyout of Carbacid. The Capital Markets Authority (CMA) accused BOC of failing to abide by takeover rules when it made its bid for Carbacid, leading to the official termination of the deal in October 2019.

BOC, however, retains a minority 5.83 percent stake in Carbacid. If BOC sells the stake in the coming weeks, Mr Patel will step back and Carbacid will be free to proceed with the buyout on its own.

“Section 108 of the Companies Act, 2015 prohibits a subsidiary from being a member of its holding company … Therefore, Carbacid cannot at this stage acquire more that 49.99 percent of the shares of BOC. For this reason, Carbacid is acting jointly with Aksaya in making the offer,” Carbacid said.

BOC’s major shareholder, BOC Holdings, has committed to selling its 65.38 percent stake in the company, with the transaction expected to be completed by July 2021.

BOC could be delisted from the NSE if its shareholders controlling a combined stake of 75 percent or more agree to sell their holdings.