Africa facts zone can authoritatively confirm that Nigerian billionaire Femi Otedola has sold off all of his Transcorp Shares to Tony Elumelu, the company’s chairman and largest shareholder, two weeks after news of his acquisition of a sizeable minority stake first broke.
This puts an end to an intriguing corporate drama that has shocked, rocked, and rolled Nigeria’s capital markets over the past few days.
The purchase was a negotiated agreement between Otedola and Elumelu that was arranged by well-known associates of the two businessmen.
A close friend of the two billionaires, who wished to remain anonymous, claimed that Elumelu paid Otedola a 400% premium over Transcorp’s closing price in order to purchase his block of shares.
This would indicate that Otedola, who held 2.6 billion shares, or 6.3 percent of the corporation, received a dividend of NGN 12.5 ($0.027) per share and N32.5 billion ($70 million), or around $70 million.
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How Otedola took over Transcorp in few days
On April 12, Otedola, the chairman of Geregu Power, is now Transcorp’s second-largest stakeholder after purchasing a 5.52 percent interest in the business.
A company owned by Otedola and AMCON completed the transaction.
A few days later, Otedola bought more shares, increasing his ownership stake in the firm to 6.3 percent.
The purchase implied that the wealthy investor was probably going to start a bidding battle for control of one of Nigeria’s most well-known and indigenous corporations.
The announcement shocked the financial world and sparked interest in Transcorp’s shares at the Nigerian Exchange (NGX) Limited, which led to a 128 percent increase in the stock price during the previous two weeks.
The chairman of Geregu Power was eager to seize control of Transcorp from Elumelu and was eying its valuable power assets, according to sources close to Otedola.
While Transcorp has two power plants in Delta and Rivers states with a combined capacity of over 2,000 MW, its market cap is less than $300 million.
In contrast, Otedola’s publicly traded Geregu Power has one power plant in Kogi State with an installed capacity of 435 MW and boasts a market cap of more than $1.6 billion.
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How Tony Elumelu retaliated and Outsmarted Femi Otedola to take over Transcorp
Elumelu increased his total ownership in the company to 10.5 billion shares, or 25.9%, in a matter of days by purchasing an additional 9.7 billion shares in separate transactions, solidifying his position as Transcorp’s largest shareholder.
When news of Otedola’s acquisition gained widespread attention, Elumelu projected a positive picture of a cordial relationship with Otedola in the Nigerian media.
However, behind the scenes tensions had grown in their relationship with the two billionaires.
According to a source, “Elumelu had been calling Otedola to try and resolve things at first, but Otedola, who has been in New York, was not even picking up Elumelu’s calls.”
Elumelu is alleged to have contacted their common acquaintances right away to assist in negotiating a contract with Otedola.
Elumelu himself gave an interview to a well-known Nigerian television station called ARISE, where he talked highly of his decades-long friendship with Otedola and expressed his appreciation for Otedola’s investment in the company.
Behind the scenes, Otedola was under pressure from the two powerful business titans’ shared acquaintances to do a deal with Elumelu.
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Femi Otedola: Why I Sold my Shares in Transcorp to Tony Elumelu
This is the whole statement from Mr. Otedola
“In 2005, Tony approached me about helping him raise money to buy UBA while he was the managing director of Standard Trust Bank.
I eagerly offered him $20 million, or N2 billion at the time, to purchase the UBA shares required for the transaction.
After a short while, the share price increased, and I made the decision that it was time to sell and leave the bank.
However, Tony pleaded with me to keep onto the shares since he thought there were promising future developments, so I did.
“I assumed the chairmanship of Transcorp Hotel in 2007 with a 5% shareholding, and Tony unknowingly quietly began purchasing shares over time.”
“By the next year, 2008, I had declared bankruptcy in Nigeria. Tony then went ahead and grabbed my shares in Africa Finance Corporation, where I was the largest stakeholder, as well as my shares in UBA in order to pay off the interest on my debts.
Transcorp Shares
Soon after, Albert Okumagba told me an American company was interested in buying my Transcorp shares, so I decided to sell them.
This alleged American company, however, was Tony Elumelu. I decided to step down as the hotel’s chairman when this was made public.
Years later, in 2012, Tony contacted me to say he wanted to meet with me. As a result, we went to my office, where I had just finished a meeting with international investors who hadn’t yet left the building.
He inquired about the type of meeting I had, and when I said that I wanted to work in the power industry, especially at the Ughelli Power Plant, he became curious.
Tony secretly made a bid for Ughelli, and he outbid me by proposing to pay $300 million for the plant.
And the rest, as they say, is history.
“Jump ahead to the present…”
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Bid To Buy Transcorp
“Unfortunately, my bid to purchase Transcorp Plc for N250 billion was turned down.
It seems some stockholders had a different vision from mine, which was to maximize the company’s potential as a Nigerian conglomerate with a market valuation of at least N2 trillion rather than the present N40 billion.
“As a businessman, I support market dynamics and robust competition. I appreciate the majority shareholder’s choice to buy me out since a ship cannot be steered by two captains. This is how the game is designed.
Let me be clear, though: I made my offer with the best interests of Transcorp Plc and its stockholders in mind. I saw a chance to realize the full potential of the business and benefit everyone.
“It’s critical for investors to comprehend that open markets require free admission and free exit.
The rush for shares following my purchase is evidence of the value Transcorp Plc can provide, and I hope the business continues to prosper under new management.
“This is my statement to Transcorp Plc and its shareholders: I am still dedicated to the expansion and prosperity of Nigerian companies, and I will never stop searching for new opportunities to add value for all parties involved.
Unfortunately, stakeholders are consistently taken advantage of by receiving stipends while the company’s owners and management enjoy a jet-set lifestyle, which is bad for the stakeholders.
I appreciate the chance to participate in this fascinating part of Transcorp’s history.Otedola, Femi
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Femi Otedola and Dangote’s dispute
Femi Otedola also squared off against Africa’s richest man Aliko Dangote in 2009 after the latter violated a gentleman’s agreement and entered Otedola’s oil sector.
At the time, a consortium outbid Otedola’s business to purchase Chevron’s downstream businesses in West Africa.
The group included an oil company connected to Dangote. Both men had made a commitment to refrain from entering the other’s field of endeavor.
Otedola began buying substantial amounts of shares in Dangote’s publicly traded firms as payback.
Additionally, he paid for advertisements in a number of reputable Nigerian publications alleging firms connected to Aliko Dangote and Dangote’s stockbrokers of manipulating the share price of African Petroleum, the business held by Otedola at the time. Government representatives from Nigeria ultimately resolved the conflict.