Prudent Energy Services Limited, the new majority shareholder of Forte Oil Plc, is set to acquire fresh N22 billion worth of shares of the company.
The public takeover bid, expected to be accomplished via a Mandatory Tender Offer (MTO), will enable Prudent Energy to own the majority stake in Forte Oil’s ordinary shares as required by the Nigerian Stock Exchange’s extant rules.
Recall that Nairametrics had reported last week about the full acquisition of Forte Oil’s majority stake of 75% which was previously held by Mr Femi Otedola, the company’s former Chairman.
The tender bid, which will be executed by Ignite Investments and Commodities Limited on behalf of Prudent Energy, seeks to procure N22.3 billion worth of shares from the minority shareholders of Forte Oil Plc.
The capital market advisers to the new core investors said it is necessary for the new investor to take over Forte Oil’s minority shares.
Section 131 of the Investment and Securities Act, as well as Rule 445 of the Securities and Exchange Commission, requires anybody or any organisation that acquires at least 30% stake in a company to make an MTO to other minority shareholders.
Prudent Energy’s earlier acquisition of the majority shares in Forte Oil saw the former purchase 964.097 million ordinary shares of 50 kobo each of the latter’s shares. The total issued shares and outstanding shares of Forte Oil is 1.302 billion shares of 50 kobo each, meaning that minority shareholders hold 338.38 million ordinary shares of 50 bobo each.
It is noteworthy that the transaction price for each unit of shares acquired from Mr Otedola by Prudent Energy through Ignite Investments and Commodities Limited was N66.01 per share. The share transfer through cross deals at NSE’s negotiated window was N66.25.
Interestingly, Ignite is bound by the terms of the MTO to purchase the minority shares at the same rate used in its transaction with Otedola. The transaction price takes into consideration the fair value of a company as against the share price, which is often offered at face value.
It is speculated that Ignite Investments may use a valuation based on the average trading price of Forte Oil over a certain period usually between 30 and 60 days.
Forte Oil is currently trading on the floor of the NSE at N31.2 per share.
About Mandatory Tender Offer: An MTO is a public open offer or bid by a potential acquirer of a company, inviting shareholders to offer their shares for sale at a particular price during a specified time. It is subject to a minimum and maximum number of shares. The acquirer often offers a price at a premium over the current market price of the target company’s shares as a means of inducing the shareholders.