Mobil Oil Shareholders to Reap More Capital Appreciation

Minority shareholders in Mobil Oil Nigeria Plc are to enjoy more capital appreciation on their shares as Nipco Plc may buy their shares at N420 per share.

Nipco Plc, an indigenous Nigerian downstream oil and gas company, is acquiring 60 per cent stake in Mobil Oil Nigeria Plc for $301 million or N91.8 billion and has applied to the Securities and Exchange Commission (SEC) for approval of this acquisition.

This transaction translates to N432 per share, which is a huge premium from the current market price of N280.

However, if this acquisition is approved by SEC at the price, Nipco being a holder of more than 60 per cent of the company would need to comply with the provision of the Investment & Securities Act by buying shares of minority shareholders at the same price of N423 through a mandatory takeover bid.

This would be a massive price appreciation to be enjoyed by minority shareholders of Mobil during the mandatory take over process.

The shares of Mobil have witnessed an unprecedented rally since Nipco Plc signed the sales purchase agreement on October 17, 2016. The shares which stood at N186 on that day have soared to N280, indicating a jump of 127 per cent.

Shareholders of Nipco last week approved the acquisition at an Extra-ordinary General Meeting
Speaking on the acquisition, the Managing Director of Nipco Plc, Mr. Venkataraman Venkatapathy had said the company considered it acquisition an important synergy.

“It is part of our strategic move to support Nipco’s continuous growth and expansion of its Nigerian retail footprint. We are confident of adding tremendous value to Mobil Oil Nigeria and likewise Mobil Oil will add a huge value to Nipco. In furtherance of this value addition, Nipco will continue to maintain the Mobil brand on its retail outlets as well as continue to blend and sell the Mobil brand of lubricants under Branding Licence(s) from ExxonMobil,” he said.

According to him, Mobil Oil will continue to run as a separate, distinct and independent company, from Nipco Plc, each with its own CEO who will report to its board of directors .

He added that Mobil Oil will continue to maintain the Mobil brand at its retail outlets as well as blending and selling Mobil brand of lubricants under branding licensee [s] from ExxonMobil.