June 24, 2022/CSL Research
Following a petition filed for and on behalf of fourteen (14) minority shareholders of Oando, holding a total of 299,257,869 shares led by Venus Construction Company Limited on 25 March 2021 at the Federal High Court, Lagos, the majority shareholder in Oando Plc has agreed to the request to buy out the entire shareholdings of the minority shareholders. This was brought pursuant to sections 353, 354 and 355 of the Companies and Allied Matters Act 2020 (“CAMA”). Oando made this known at the Nigerian Exchange (NGX) as the indigenous energy solutions group released its outstanding interim results up till the quarter ended December 31, 2020.
According to the company, the shareholders requested that the court order the buyout of their entire shareholding either by Ocean and Oil Development Partners (OODP) Limited or Oando, as the petitioners believed that this would be in their best interest as well as that of the company. OODP has a shareholding of 57.37% in Oando Plc and the above-mentioned minority shareholders have 42.63% shareholding. In its ruling, the court issued “an order directing Oando to carry out a Scheme of Arrangement in accordance with the provisions of the Companies and Allied Matters Act 2020 to consider OODP’s proposal to buy out the shares of all the minority shareholders in Oando
Upon completion of the said acquisition, Oando will be wholly owned by Ocean and Oil Development Partners (OODP) Limited and by default, will be delisted as it assumes a limited liability status. We are worried that this will be the second company in the Oil and Gas sector to delist from the Exchange after 11 plc voluntarily delisted on 7 May 2021 hence, further shrinking the already shallow market. Investors on the Nigerian Exchange have had limited options for their asset allocation; hence pricing is easily overweight on the few bluechip companies.
We recall that 11 Plc, formerly known as Mobil Oil Nigeria Plc, delisted its shares from the Nigerian Exchange to end its 42-year listing. This shaved off over N82 billion from the NGX market capitalization. NIPCO Investments Limited, a wholly owned subsidiary of NIPCO Plc, had in March 2017 took over the 60% majority equity stake of ExxonMobil Oil Corporation in Mobil Oil Nigeria Plc in a US$301 million acquisition deal. The company’s name was subsequently changed to 11 Plc, pronounced as double one. The company stated that delisting would enable it to explore strategic opportunities, alliances and collaborations that can bolster earnings and synergized benefits with little or no regulatory obligations.
According to the company, 11 Plc will be able to focus on revenue generation, consider strategic opportunities, alliances, and collaborations; and tremendously shift from regulatory, administrative, and financial reporting regulations that companies listed on the Nigerian Stock Exchange must adhere to.
While it is imperative for the Nigerian Exchange to strengthen its market development strategies, we note however, that the emergence of viable companies depend largely on the prevailing economic and socio-political environment
