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Carbacid unsure on Sh1.2bn buy of BOC Kenya
Carbacid is a major producer of carbon dioxide, which is used to carbonate soft drinks, wine and beer and in solid form as dry ice in the refrigeration of foodstuffs like ice cream and meat products.
Uncertainty has hit the bid by Carbacid Investments to acquire fellow listed gas maker BOC Kenya even after the Capital Markets Tribunal struck out a petition opposing the protracted deal.
Carbacid has told its shareholders that its board is now carrying out an internal review to determine the fate of the deal, which was initiated in November 2020 before being held up by the petition by former BOC Kenya chairman Ngugi Kiuna, who argued that minority shareholders were disadvantaged by an undervaluation of the company.
The tribunal ruled on the matter on August 29, 2024, dismissing Mr Kiuna’s application on grounds that the transaction complied with the provisions of the Capital Markets Act, and that the decision of whether an offer is fairly priced and whether to accept it is up to shareholders, rather than the regulator.
“The board is currently reviewing the next course of action given the time that has elapsed since the offer was made,” said Carbacid chairman Dennis Awori in the company’s latest annual report.
Carbacid and its affiliate Aksaya Investments LLP, which is 99 percent owned by billionaire businessman Baloobhai Patel, offered BOC shareholders Sh63.50 per share or Sh1.2 billion in total for their units in the deal, which targeted a 100 percent buyout of the issued shares of the company.
Mr Patel, through Aksaya, is the single largest shareholder of Carbacid, with a stake of 49.9 percent, with BOC Kenya also holding a 5.83 percent stake in Carbacid.
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.
Today, the BOC share is trading at Sh81 per unit, meaning that if the deal were to proceed at the original offer price, shareholders would be taking a haircut of 21.6 percent to offload their units.
Carbacid and Aksaya had also entered into an irrevocable agreement with BOC Kenya’s UK based parent BOC Holdings over the sale of its 65.38 percent stake in the Kenyan subsidiary, giving the bidders a strong platform on which to launch their takeover.
That agreement however contained clauses that indicated it would lapse if the deal had not been concluded by the end of July 2021, unless there was a written agreement between the parties for an extension.
Carbacid is a major producer of carbon dioxide, which is used to carbonate soft drinks, wine and beer and in solid form as dry ice in the refrigeration of foodstuffs like ice cream and meat products.
BOC Kenya meanwhile sells oxygen to hospitals, and other industrial gases that are used in welding, among other applications.
