UAP Holdings directors Joe Wanjui and James Muguiyi are yet to complete their sale of a combined six percent stake in the insurer for Sh3.1 billion to Old Mutual despite earlier announcements that the transaction was completed in November 2018.
The delay in sealing the deal is a signal that it may have been held up by regulatory issues. The transaction was still pending as of last month but UAP expects it to be completed this year.
It was not immediately clear whether the delay will have an impact on the buyout price of R437 million (Sh3.1 billion) that had been agreed on by the parties.
“The formal conclusion of the acquisition of a combined 6 percent of shares from Bawan Limited (Mr Wanjui’s investment vehicle) and Mr James Muguiyi by Old Mutual Holdings Limited was not completed in 2018, as such, the changes in shareholding will be reflected in 2019 after the completion of the requisite registration formalities,” UAP says in its latest annual report.
The insurer did not say what caused the delay. Once finalised, the transaction will raise Old Mututal’s stake to 66.58 percent from the current 60.58 percent.
It is not immediately clear whether the two billionaire entrepreneurs were to tender an equal number of shares to Old Mutual. Mr Wanjui still retained 20.43 percent while Mr Muguiyi held 5.96 percent as of last month. They will, however, sell 12.6 million UAP shares combined.
The duo negotiated for a higher buyout price of about Sh244 per share compared to Old Mutual’s initial entry price of Sh180 per share in 2015 when it bought stock from a consortium comprising billionaire investor Chris Kirubi, his investment firm Centum and private equity funds.
Old Mutual recently disclosed how the duo’s higher exit price was arrived at. Their buyout price arose from the upward adjustment of the initial Sh180 per share by the return on a one-year bond and downwards by the dividends they will have received from UAP in the interim period.
“The put option exercise price is equal to the initial price (paid by Old Mutual plc in acquiring its current holding), increased by the Government of Kenya Treasury one year bond rates and reduced by dividends declared by UAP,” the multinational said.