Carbacid Investments will be forced to offer shareholders of BOC Kenya Limited fresh terms should it move ahead with its protracted bid to buy out its fellow gas maker, potentially raising the cost of the transaction compared to the original offer.
The Capital Markets Authority (CMA) has told the Business Daily that Carbacid will need to update its offer document should it opt to continue with the transaction, mainly due to the amount of time that has lapsed since its original bid in November 2020.
The proposed transaction was held up for four years by an appeal filed by former BOC Kenya chairman Ngugi Kiuna at the Capital Markets Tribunal, challenging the CMAs decision to approve the offer despite what he termed as an undervaluation of the BOC Kenya shares.
The tribunal ruled in favour of Carbacid, BOC and CMA September last year, paving the way for a completion of the deal.
Carbacid chairman Dennis Awori subsequently told shareholders in November (in the firm’s annual report) that the company’s board was carrying out an internal review on the deal, taking into account the time that had elapsed since the offer was made.
Neither Carbacid nor BOC has approached the CMA for authorisation to continue with the transaction, suggesting that they are still mulling whether to proceed.
“The Authority has not been informed by the parties/bidders regarding the action that they intend to take,” the CMA said in responses to Business Daily queries on the matter.
“If the offerors decide to proceed with the offer, there may be a need to update the offer document and the shareholder circular due to passage of time. If or once the Authority is approached by the parties it will guide, as appropriate, prior to the reopening of the offer for consideration by shareholders.”
Carbacid, acting in concert with its affiliate Aksaya Investments LLP —which is controlled by businessman Baloobhai Patel— originally offered BOC Kenya shareholders Sh63.50 per share or Sh1.2 billion in total.
However, Mr Kiuna in his failed appeal against the CMA’s decision to approve the transaction said the regulator failed to protect the rights of minority BOC shareholders, pointing to an independent valuation that assigned BOC Kenya a fair value of Sh91.76 per share.
Mr Kiuna also raised issue with the commitment by BOC Kenya’s UK parent BOC Holdings to sell its 65.4 percent to Carbacid at the offer price of Sh63.50, which he said did not take into account the value of cash and land held by BOC Kenya.
Mr Kiuna has in the meantime been raising his stake in BOC Kenya, from 7.6 percent or 1.48 million shares in 2021 to 17.66 percent or 3.45 million shares at the end of 2024, giving him enough muscle to block a mandatory buyout of his stock should the deal progress to completion.
At the time of the announcement of the transaction on November 25, 2020, BOC’s shares were trading at Sh66 each, before going up to Sh69 the following day.
The offer price however represented a premium of 7.9 percent on the volume weighted average price over the previous 30 days.
BOC's shares last traded at Sh86, meaning that if the deal were to proceed at the original offer price, shareholders would be taking a haircut of 26 percent to offload their units to Carbacid.
The stock’s price has traded at an average price of Sh83.10 since the September tribunal ruling was made, pointing to a potentially higher offer price should Carbacid use the same method of arriving at its weighted price.
