Portland Paints, CAP MDs React To Acquisition Deal, How It Affect Shareholders

The Managing Director of Portland Paints, Bolarin Okunowo, has reacted to reports of the company being acquired by Chemical and Allied Products (CAP). AllNews had reported that both Portland Paints and Chemical and Allied Products are considering a merger, which will see shareholders of Portland Paints paid by cash or shares in CAP.

In a statement obtained by AllNews, Okunowo said, "In recent months, the Board and management of Portland Paints have evaluated various strategic options with a view to positioning our company to capture emerging growth opportunities. CAP’s business is complementary to ours, and both companies will be better able to serve our respective customers by coming together. I believe thecombination of Portland Paints and CAPwill yield significant benefits for all of our stakeholders.”

READ ALSO: CBN Deducts N917.5bn From Customers' Accounts Across Nigerian Banks

Also commenting on the proposed deal, the MD of CAP, David Wright, said, "The decision  to  pursue  the  Proposed  Merger,  is  driven  by  the  Board’s  strategic  plan  to aggressively grow within the Nigerian and African markets. We believe that the Proposed Merger presents a unique opportunity that will benefit all stakeholders, from shareholders to customers as well as the broader economy.

"I am excited by the prospect of an enlarged company with a broader decorative paint portfolio covering the premium,mid-market and affordable segments and the inclusion of marine and protective coatings, all of which will benefit our customers and shareholders.”

What You Need To Know About The Proposed Merger

Okunowo said the deal, which still awaits shareholders' and regulatory approvals, will better position the company and enable Portland Paints capture emerging growth opportunities.

Portland Paints is a subsidiary of UAC, and the producer of Sandtex paint brand. The merger is also subject to the sanction of the Federal High Court.

READ ALSO: Stanbic IBTC Earnings Fall In Q3 After Appointing Sola David-Borha

Once the merger is approved, Portland Paints will no longer exist, as CAP will become the identity of the new entity. Portland Paints' assets, liabilities, and business undertakings including real property and intellectual property rights will be transfered to CAP.

What Portland Paints' Shareholders Gain From Merger

With the merger still subject to regulatory and corporate approvals, shareholders of Portland Paints have been offered NGN2.90 kobo cash for every Portland Paints' share held or received, 1 new ordinary share of CAP, credited as fully-paid up for every 8 Portland Paints shares held, the statement read.

While explaining the reason for the price offer in a joint statement, both companies said, "The proposed consideration represents a 45% premium to the last traded share price of Portland Paints on October 16, 2020, being the last business day prior to the date on which CAP sent its merger proposal to the Board of Portland Paints and a 41% premium on the trading price as at close of trading on October 23, 2020."