Ex-BOC chairman raises stake, wins rights to block his buyout

BD Warsteiner Chief Guest L

Kenyan tycoon, Kiuna Ngugi. 

Photo credit: File | Nation Media Group

Ex-BOC Kenya chairman Ngugi Kiuna raised his stake in the company to 11.2 percent in the year to March 2024 from 8.56 percent a year earlier, putting him above the threshold needed to block a mandatory buyout of his shares in the firm that is the subject of a takeover bid.

BOC’s annual report for 2023 shows that he acquired 521,400 shares in the company in the 12-month period, currently worth Sh44.84 million.

The share purchase helped raise his holding in the company by 31.2 percent to 2.19 million shares, up from 1.67 million in March 2023.

Mr Kiuna, the firm’s second-largest shareholder behind BOC Holdings (UK), has been building up his stake over the last three years as he fights a proposed takeover of the company through a joint bid by fellow listed gas maker Carbacid Investments Plc and Aksaya Investments LLP.

The law on takeovers and mergers allows a buyer to make a compulsory buyout of minority shareholders once they acquire at least 90 percent of a company. The minority shareholders bought out compulsorily are paid either the market value of their shares or the amount offered to other shareholders, whichever is higher.

By raising his stake to 11.2 percent, Mr Kiuna is now protected from this mandatory buyout, meaning that Carbacid and Aksaya would need to negotiate a price agreeable to him should the buyout proceed to its conclusion.

He also has an option of remaining a minority shareholder but at the risk of holding illiquid shares should BOC be delisted from the Nairobi Securities Exchange.

The deal was first announced in November 2020 and was expected to be concluded by July 2021.

Mr Kiuna filed a petition at the Capital Markets Tribunal in March 2021 blocking the payout, saying that the Capital Markets Authority erred when it approved the takeover by ignoring an undervaluation of BOC Kenya and also disregarded the protection of minority shareholders of the company.

BOC Kenya said in its annual report that as of March 2024, the matter was still pending before the tribunal. Therefore, the deal remained in abeyance, awaiting the completion of the legal matter.

Carbacid and Aksaya offered BOC Kenya shareholders Sh63.50 per share, valuing the whole deal at Sh1.2 billion. The two entities also secured a commitment to sell from the majority shareholder BOC Holdings, which holds a 65.4 percent stake in the company.

In January 2021, an independent financial advisor hired by BOC to review the offer said the company was worth at least Sh91.76 per share or an aggregate of Sh1.7 billion.

The company closed trading at Sh86 per share at the Nairobi Securities Exchange (NSE) yesterday, giving it a market capitalisation of Sh1.68 billion.

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