By PETER EGWUATU
Unilever Overseas Holdings B.V. has indicated interest in increasing its equity stake in Unilever Nigeria Plc from 50.04 per cent up to a maximum of 75 per cent and has made a tender offer to individual shareholders of Unilever Nigeria.

Vanguard gathered that the offer initially scheduled to close June 10, 2015 has been extended to June 25, 2015 to enable more shareholders take effective decision that would see the company expands its operations.

Under the terms of the offer, it was gathered that  Unilever Overseas is seeking to acquire up to 942,215,930 shares in the company at ¦ 45.50 per share in cash (the “offer price”).   “This is not a mandatory takeover bid as shareholders who are willing to sell can voluntarily do so” Unilever noted.

MD, Unilever Nigeria, Mr. Yaw Nsarkoh

The offer price represents a premium of 33.8 per cent to the company’s closing share price on 23 March 2015, the day prior to Unilever Overseas announcing its intention to make the Offer, and a premium of 33.2 per cent to the 3 month Volume Weighted Average share price as at the same date. The total value of the transaction at the intended Offer Price is approximately ¦ 42.871 billion (€192.6 million at prevailing exchange rates).

Regulatory and Advisers approvals

The Directors of Unilever Nigeria, who have been advised by FBN Capital Limited, consider the terms of the Offer to be fair and reasonable from a financial point of view, to the other shareholders of Unilever Nigeria Plc.

The offer was approved by the Securities and Exchange Commission and the Nigerian Stock Exchange and is subject to the conditions and other terms set out in the announcement and to the full terms and conditions which was set out in the formal Offer document. Citigroup Global Markets Limited and Chapel Hill Advisory Partners Limited are acting as financial advisers to Unilever Overseas. The proposed move will see Unilever Overseas up its equity stake in the Nigeria business from 50.04 per cent up to a maximum of 75 per cent, with the aim to continue to maintain the company’s listing on the Nigerian Stock Exchange as well. If accepted at the maximum level, the value of the deal could reach €200 million (based on prevailing foreign exchange rates).

Bruno Witvoet, Executive Vice President of Unilever Africa said: “This Proposal demonstrates our commitment to the Unilever Nigeria business and confidence in the long-term growth prospects of the company and consumer goods sector in Nigeria.”

Meanwhile, ass the closing date of the offer draws nearer, market analysts are of the view that Nigerian shareholders are likely to part with some volume of their shares to benefit from the offer and take advantage of the liquidity opportunity it portends to them. Analysts have also said that the Offer would provide shareholders who wish to sell some or all of their shares in Unilever Nigeria the opportunity to do so.

Unilever is one of the world’s leading manufacturers of Food, Home and Personal Care products with sales in over 190 countries. Unilever products are present in 7 out of 10 homes globally and are used by over 2 billion people on a daily basis. Unilever employs 171,000 people around the world and generate annual sales of over €50 billion. Over half of the company’s footprints are in the fast growing developing and emerging markets (56% in 2011). Company’s portfolio includes some of the world’s best known brands such as Knorr, Persil , Dove, Hellmann’s, TRESemmé, Lipton, Sure, Wall’s and Lynx.

Unilever has stated that  it will grow its business in Nigeria and continue its long term commitment in African markets. Unilever Overseas has no intention of delisting from the Nigerian Stock Exchange.

Financial performance both full year and first quarter

Unilever Nigeria reported 21 percent decline in first quarter (Q1) 2015 Profit Before Tax (PBT) to N864.742 million from N1.089 billion in Q1, 2014. Also, Profit After Tax (PAT) declined by 21 percent to N590.448 million from N750.629 million in the corresponding quarter of 2014. “The sales growth is the first time in five quarters Unilever’s topline has shown any meaningful growth. We believe unit volume growth was the principal driver for the topline as prices have been kept relatively flattish year-on-year (y/y),” Olajumoke Okeowo and Uwadiae Osadiaye, both analysts at Lagos-based FBN Capital Limited, said in their first reaction to Unilever Nigeria Q1’15 numbers. According to the Analysts “Unabated insecurity challenges in the North and increased competition in the calmer southern markets mean that consumer good companies cannot readily pass on higher costs to consumers for fear of loss of market share. However, we await management’s comments on this.”

Shareholders endorsement of dividend

Meanwhile, shareholders of Unilever Nigeria recently unanimously approved the 10 kobo dividend per share proposed by its Board of Directors, even as they lament over high cost of borrowing from the banks. The shareholders at the 90th Annual General Meeting, AGM approved a total payout of N378.3 million dividend for the financial year ended December 31, 2014. Speaking at the AGM, shareholders commended the company for declaring divided, even as they seek for higher dividends in the next financial year. According to them “We really pity the manufacturing industry for the turbulent business environment they operate upon. Nevertheless, we advise the Board to reduce the high cost of carrying out its business.

Expenses like marketing, administrative etc should be reduced. We are not happy that the company is spending so much servicing loans from the banks. Instead of borrowing from banks at high interest rate the company can seek fresh funds from the existing shareholders.” In his remarks at the meeting, Managing Director, Unilever Nigeria Plc, Mr. Yaw Nsarkoh said “We really appreciate the contribution of the shareholders and are doing everything possible to reduce cost. It is evident that the business environment will be more daunting in 2015, but we will remain focused on our priorities to satisfy our consumers. We are committed to stay and invest in Nigeria. Our ambition is to continue to deliver value to all our stakeholders and positively affect our communities by leveraging on the Unilever Sustainable Living Plan.”