After the protracted acquisition has rumbled on for over two years, Carbacid Investment reportedly wants BOC Kenya to withdraw its takeover bid, to pave way for resumption of trading at the Nairobi Stock Exchange (NSE).
BOC Kenya’s takeover offer of Carbacid has been on the cards for the past 27 months after the Capital Markets Authority declined to endorse the deal, arguing that BOC Kenya had not met all required terms. Shares of the two listed gas manufacturers were suspended from trading at NSE in December 2005 accordingly, with the intention of allowing BOC to process the transaction.
As a result, shareholders of the firms have missed out on the opportunity to make capital gains from their shares - at a time when the stock market has witnessed a share price boom.
Now, Carbacid Investment is asking the CMA and BOC Kenya to withdraw the offer and make a fresh bid at a later date. The Carbacid board said in a statement, “To be fair to all shareholders, BOC Kenya and CMA should expeditiously facilitate the withdrawal of this offer to pave the way for resumption of trading at the NSE.”
“Given the performance of the manufacturing stock over the past year, the combined stock could have appreciated sharply over the two year period,” explained Bob Karina, the Managing Director of Faida securities.
The key condition in the deal to warrant the takeover, which the CMA insists was not implemented within a set time frame, was that at least 80% of Carbacid shareholders back the takeover transaction, but only investors holding 71% shares backed the transaction.
The push by BOC Kenya to acquire Carbacid had been informed by its quest to enter the lucrative carbon dioxide market, of which Carbacid has 90% stake. Faced with the threat of competition from Carbacid, which had already entrenched itself in the market, coupled with the small market for the product, BOC Kenya decided it would be easier to acquire Carbacid.
But the legal battle has complicated the issue, leaving shareholders with immobile shares with the firms facing huge legal costs besides the loss of time while pursuing the deal. The Carbacid board now says that BOC Kenya should present a fresh bid at a future date should the deal be in the interest of both companies.