The Boards of Directors of Chemical and Allied Products Plc and Portland Paints and Products Nigeria Plc have taken a decision to merge their respective businesses in accordance with applicable laws.
This will lead to the emergence of CAP as the resultant entity in the proposed merger, according to separate statements issued on Monday.
The proposed merger is subject to the required regulatory and corporate approvals being obtained.
The respective boards of CAP and Portland Paints said they strongly believed that the proposed merger, which provides a unique opportunity to change the Nigerian paints and coatings landscape, would be attractive and value accretive to shareholders of both companies.
The statements signed by Managing Director, Chemical and Allied Products Plc, David Wright, and Managing Director, Portland Paints and Products Nigeria Plc, Bolarin Okunowo, stated that the decision to pursue the proposed merger was driven by the strategic objectives of the Boards of CAP and Portland Paints to drive growth and expansion within the Nigerian and African markets.
CAP and Portland Paints play in distinct segments, and the enlarged CAP will have a broader portfolio covering the top-end/premium decorative segment, the mid-market decorative segments as well as the industrial segment (in particular marine and protective coatings).
The statement read, “We believe that the proposed merger will provide our customers access to a broader product portfolio and a wider range of value options to meet their needs.
“The combination of CAP and Portland Paints will create a formidable paints and coatings company that will be strategically positioned across segments as a result of its combined brand portfolio (Dulux, Sandtex, Caplux and Hempel); its diversified product ranges spanning decorative and industrial with widespread distribution channels and retail footprint in Nigeria.
“Subject to receipt of the relevant regulatory and corporate approvals, the proposed merger will be executed by way of a Scheme of Merger (the Scheme) in accordance with Section 711 of the Companies and Allied Matters Act, 2020 and other applicable laws, rules and regulations.
“The scheme will involve the transfer of all Portland Paints’ assets, liabilities and business undertakings including real property and intellectual property rights to CAP.”
In consideration for the transfer, CAP is offering shareholders of Portland Paints a choice to receive N2.90 cash for every Portland Paints share held or one new ordinary share of CAP, credited as fully-paid up for every eight Portland Paints shares held.
The proposed consideration represents a 45 per cent 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 per cent premium on the trading price as at close of trading on October 23, 2020.
Completion of the Proposed Merger is subject to approvals from the Federal Competition and Consumer Protection Commission, the Securities and Exchange Commission, the Nigerian Stock Exchange as well as shareholders of CAP and Portland Paints, respectively.
The statement added that the proposed merger was also subject to the sanction of the Federal High Court.
Commenting on the proposed merger, 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.”
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 the combination of Portland Paints and CAP will yield significant benefits for all of our stakeholders.”
