By Richard ABANGWU InvestAdvocate

Lagos (INVESTADVOCATE)-The Nigerian Stock Exchange (NSE) Monday suspended the trading in shares of Bag Manufacturing Company Plc (BAGCO) following the proposed Scheme of Merger between the Company and Flourmills of Nigeria Plc.

This is coming on the heels of a Notice by Stanbic IBTC, Stockbrokers to the proposed Merger affirming  that trading on BAGCO shares will be placed on full suspension effective Tuesday March 05 2013.

The Notice made available to www.investadvocateng.com in Lagos Nigeria reads thus:  “In line with the Scheme of Merger between Flourmills of Nigeria Plc and Nigerian Bag Manufacturing Company Plc, the last date for Scheme shareholders to elect for cash or shares in Flour Mills is March 5, 2013” the Notice said.

According to Stanbic IBTC, this is to determine Scheme Shareholders who have elected for cash consideration and consequently the number of Scheme Shares to be listed, Flour Mills and BAGCO Group have determined that the last trading day on the shares of BAGCO Group will be March 4, 2013, hence, the request that the shares of BAGCO Group be placed on FULL SUSPENSION on March 5, 2013 prior to its eventual delisting from the Daily Official List.

As earlier reported, Nigeria’s Securities and Exchange Commission (SEC), had in late November 2012 approved in principle to the proposed business combination involving Flour Mills, Bagco and its subsidiaries – Northern Bag Manufacturing Company Limited and Bagco Morpack Nigeria Limited.

The party to arrangement affirmed that the scheme of the merger will result in the transfer of all assets, liabilities and undertakings of Bagco and Bagco-North to Flour Mills, while the entire Issued Share Capital of Bagco and Bagco-North respectively would be cancelled.

Following this, Flour Mills will become the only surviving Company when the process is over, while Bagco and Bagco-North will be dissolved without winding up.

In a Notice November 20 2012 the NSE said the Board of Directors (BOD) of both Companies has agreed that shareholders of Bagco will get one Ordinary Share of Flour Mills in exchange for 25 Ordinary Shares they previously held in Bagco or “or a cash consideration of N2.75 for each Ordinary Share of Bagco as at the Effective Date.”

The Company affirmed that cash consideration of N2.75,  will represent 39 percent (39%) premium to Bagco’s closing share price as at 16th November 2012, and a 68% premium to Bagco’s closing share price as at 5th September 2012, the date prior to announcement of the Transaction.

As a result of this, a Statement by Flour Mills said shareholders endorsed the proposed merger scheme between both Companies after a court-ordered meeting.

The statement said 99% of the shareholders voted in favour of the merger, but was subject to final approval of Nigeria’s SEC.