Billionaire Kiuna takes on Old Mutual in buyout row

Ngugi Kiuna. FILE PHOTO | AFP
Ngugi Kiuna. FILE PHOTO | AFP 

Billionaire businessman Ngugi Kiuna has opened a bruising court battle with Old Mutual over a planned restructuring of the company’s ownership through a buyout of all minority shareholders from the firm’s life insurance arm.

The deal will also see the entire ownership of the life business transferred to UAP Holdings, the company’s subsidiary.

Mr Kiuna claims that Old Mutual Holdings has given minority shareholders in its life insurance subsidiary a raw deal by compulsorily buying their shares at a predetermined price of Sh12.75, then offering them shares in UAP Holdings at Sh180 each.

Old Mutual Holdings, in a shareholders brief dated August 19, 2016, said consulting firm PricewaterhouseCoopers’ independent valuation of its life insurance arm had priced the shares at between Sh11.46 and Sh15.44.

UAP says in court papers that it acquired the 66.7 per cent stake that Old Mutual Holdings had in Old Mutual Life Assurance Company (OMLAC), but does not indicate when the transfer was concluded.

UAP on November 30 activated the compulsory acquisition of all OMLAC shares after High Court judge Louis Onguto declined to issue an order stopping the transaction.

Justice Onguto held that in the event the court found that OMLAC shares are worth more than Sh12.75, he can still order UAP and Old Mutual to compensate the minority shareholders.

Mr Kiuna now says the value of OMLAC shares should be set at par with or slightly less than those of UAP Holdings.

He wants the High Court to stop compulsory acquisition of his stake, arguing that the fact that UAP shares have been valued at 14 times more than OMLAC is a sign of foul play.

Mr Kiuna, who until November 30 was the fifth largest stakeholder in OMLAC with 1,096,927 shares, has teamed up with another stakeholder, Samson Kamau Kuria, in his battle against Old Mutual. Mr Kuria has 5,835 shares in OMLAC.

UAP and Old Mutual Holdings have, however, asked Justice Onguto to dismiss the suit, arguing that there is no possibility of a compulsory acquisition. UAP says it was unable to acquire 90 per cent of OMLAC’s shares, hence the suit filed by Mr Kiuna and Mr Kuria should be thrown out.

The firm has, however, not indicated how many shareholders accepted its offer to purchase OMLAC shares.

Old Mutual Holdings and UAP have accused Mr Kiuna and Mr Kuria of corporate bullying, arguing that the businessmen are seeking orders against firms in which they have no shares.

“Any compulsory acquisition of OMLAC shares was pegged on shareholders with 90 per cent in value accepting the offer. This threshold was not achieved and there is therefore neither the danger nor risk that the plaintiffs’ shares could be compulsorily acquired,” UAP company secretary Nkirote Njiru says in response to the suit.

Mr Kiuna, a trained mechanical engineer, is a seasoned businessman with a stake in several companies, and also sits on boards of some prominent companies.

He is the third largest shareholder at BOC, with 990,420 shares worth Sh106.9 million going by the current valuation of the company at Sh108 per share. Mr Kiuna chairs the boards of BOC and Transcentury Kenya where he has a 2.8 per cent stake.

He also sits on the Proctor & Allan Board. He has now asked Justice Onguto to appoint an independent actuary to conduct fresh valuation of the OMLAC shares.
The judge will issue directions on the suit this morning.

UAP and Old Mutual insist that they will not make any fresh offers to Mr Kiuna and Mr Kuria as such a move would  amount to preferential treatment of shareholders.

Mr Kiuna and Mr Kuria have no legitimate ground to file the suit, having rejected UAP’s offer to buy their OMLAC shares, UAP says.

UAP has filed an application to have Justice Onguto lock out the media from covering the proceedings.