Oando Gains 34% as Investors Target Acquisition Price
Following rush hour positioning by investors, Oando Plc’s share price appreciated by 34.11% above its opening price after a majority shareholder announced a plan to buy out all non-controlling interest in the energy company.
MarketForces Africa reported that the indigenous energy company released some of its pending results. In 2020, it reported N141 billion, according to its regulatory filing, being the year oil price contango due to covid-19 pandemic.
There were attacks on the company’s oil facilities, the period filled with headwinds which of course, impacted its earnings performance and ability to create wealth for shareholders.
Stock market data showed that from the beginning of the year to date, Oando Plc’s share price has gained 46.15% and it is currently enjoying strong buy ratings following a plan to exit the local bourse at a premium price.
In its financial year 2021, the company bounced back with more than N34.7 billion in profit after tax following a 51% increase in its sales revenue – driven by higher global prices of crude oil.
Reacting to the earnings release, and its major shareholder’s plan to yank the company off from listing on the Nigerian Exchange, Oando shares experienced rush hour.
There was a higher demand for the company’s stock on the expectation that the takeover price will exceed its market price – an opportunity to make a quick profit from risk-taking.
With 12.431 billion shares outstanding at the close of the market, Oando Plc’s valuation increased to N70.859 billion, a unit price of N5.70.
Last week, Oando told the Nigerian Exchange Limited and Johannesburg Stock Exchange Limited that it has received an offer from its core shareholder – Ocean and Oil Development Partners Limited – to acquire the shares of all minority shareholders.
The plan is to delist from NGX and JSE and re-registered as a private company. It is intended that the Transaction will be executed through a Scheme of Arrangement in line with regulators’ requirements.
Under the Scheme, each Scheme Shareholder shall be entitled to receive the sum of N7.07 in cash or its equivalent in South African Rand for every ordinary share held by the qualified Scheme Shareholders at the Effective Date of the Scheme.
The takeover price represents a 58% premium to the last traded share price of Oando on 28 March 2023, the day prior to the date of submission of the Scheme application to the Securities and Exchange Commission.
Oando Plc reported a return to profitability after a record loss of N140.7 billion in loss 2020 financial year, moved to N34.7 billion profit after tax in 2021.
The indigenous energy company saw its revenues directly impacted by an unprecedented increase in militant attacks and sabotage in 2020. In 2021, despite challenges, Oando recorded a 51 per cent increase in turnover to N722.5 billion in 2021, compared to N477.1 billion in 2020.
A review of its financials showed that revenue for the period was positively impacted by high product prices, with an increase in realised average crude oil price increased.
Majority Shareholder’s Response to Court Order
In mid-2022, a Nigerian court ordered Oando to buy out minority investors in the oil company after a group of shareholders filed a petition to demand the purchase.
According to detail obtained from the market, Ocean and Oil Development Partners, Oando’s major shareholders own 57.37%, while minority shareholders own the remaining 42.63%.
Oando has faced several shareholder disputes and investigations by the securities regulator. Last year, it settled a long-running dispute with the Nigerian Securities and Exchange Commission (SEC) which had ordered the removal of Oando’s management team and suspended its annual meetings.
In 2018, the Nigerian SEC ordered a forensic audit into the oil company’s shareholding structure, citing concerns about possible insider trading, following a petition by an indirect shareholder of Oando.
The investigations came after the company acquired ConocoPhillips’ Nigerian asset in 2014 to transform itself from a petrol retailer to an oil producer competing with multinationals.
It also said 14 shareholders had won a court order mandating the company to buy their 299.25 million shares, which will trigger a buyout of all minority investors. Oando Gains 34% as Investors Target Acquisition Price