BOC Takeover Case Dismissed

Capital Markets Tribunal Dismisses Appeal Challenging Carbacid’s BOC Takeover

👋 Welcome to The Mwango Weekly by Mwango Capital, a newsletter that brings you a summary of key capital markets and business news items from East Africa.

This week, we cover the Capital Markets Tribunal's dismissal of the appeal challenging the acquisition of BOC Kenya’s shareholding by Carbacid Investments and Aksaya Investments and Centum's extension of its share buyback programme.

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CMA Dismisses Appeal Blocking Carbacid’s BOC Takeover

Appeal Dismissed: The Capital Markets Tribunal has dismissed an appeal by former BOC Kenya Chairman, Ngugi Kiuna, challenging the takeover of BOC Kenya PLC by Carbacid Investments PLC and Aksaya Investments LLP. The Tribunal ruled that the Capital Markets Authority (CMA) properly approved the takeover, following all necessary regulations. The Tribunal rejected the grounds of the Appeal which included unfair treatment to minority shareholders, and it affirmed that the regulator’s role is based on a disclosure regime and not merit-based evaluation. The Tribunal held that BOC Holdings’ undertaking to sell its shareholding was deemed compliant with regulations.

Background of the Takeover: BOC Kenya announced in November 2020 that Carbacid and Aksaya were set to acquire up to 100% of the shareholding in BOC Kenya for KES 1.2B. On 22nd March 2021, BOC Kenya, however, through a cautionary announcement, said that its takeover by Carbacid in collaboration with Aksaya had been paused pending the hearing of an appeal at the Capital Markets Tribunal by Mr. Kiuna. The completion of the offer date was not realized due to legal challenges that prompted the extension of the buyout timeline. For the better part of 2022, vacancies at the Tribunal hampered the hearing of the case which stalled the takeover process. In the meantime, Mr. Kiuna continued accumulating more shares in BOC Kenya taking into account that a 10% holding would allow the holder to veto a resolution to delist a publicly traded firm. 

In October 2022, the High Court dismissed a petition by Mr. Kiuna halting the proposed takeover of BOC Kenya, with Kiuna arguing that Carbacid’s offer to acquire BOC Kenya at KES 63.50 per share undervalued BOC Kenya. It is worth noting that this is not the first time there has been an acquisition-related transaction between the two firms as BOC tried to acquire a controlling stake in Carbacid in 2005. The transaction did not see the light of the day as the CMA failed to give a green light. Whether the ongoing bid succeeds is yet to be established.

Changes at BOC’s Board: At BOC Kenya’s Board of Directors, Mr. Eckhardt Vorster has been appointed as Non-Executive Director and Chairman effective 1st September 2024. This follows the retirement of Mr. Robert Mbugua as Chairman and Non-Executive Director on 31st August 2024 after 12 years of service. Separately, the firm is set to pay an interim dividend of KES 2.50 per ordinary share in respect of the 6 months ended 30th June 2024 on 14th October 2024 with book closure slated for 20th September 2024.

Share Price Reaction: Carbacid’s share price closed the week as the top gainer at KES 24.05, up 41.5% week-on-week. The counter is up 60.3% year-to-date. On the other hand, BOC Kenya’s share price closed the week at KES 79.00, representing an appreciation of 3.95% week-on-week and a decline of 3.66% year-to-date.

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Centum Extends Share Buyback Programme