Serial investor and billionaire, Femi Otedola has exited his stake in Transcorp Plc, Nairametrics can confirm.
Otedola had acquired a 6% stake in Transcorp over a series of carefully orchestrated purchases going almost unnoticed until the acquisition was announced. Nairametrics first announced the acquisition.
Reliable sources with knowledge of the transaction inform Nairametrics that the billionaire investor reached a deal with Elumelu to exit the company.
The decision effectively staves off a possible greenmail situation for Transcorp which may have turned out murky.
Both parties entered negotiations about a possible exit in the early hours of Thursday after both had declared willingness to work together in an apparent bromance.
The negotiations leading to the agreement were said to be swift yet cordial as both parties opined it was in their mutual best interest to part ways. Elemelu and Otedola publicly agreed to work together to promote Transcorp’s interests.
Sources also indicate the attention drawn by the jostle for shareholding was a distraction for the company thus paving the way for a decision to part ways. It is understood that both parties will continue to explore other forms of collaboration over their common interest in the power sector.
Sources with knowledge of the deal reached between the two billionaires indicate Elumelu bought Otedola out at a premium said to be between 4 to 6x of his average cost per share. Nairametrics could not immediately independently verify the transaction terms.
However, confirmed sources from Elumelu’s camp who spoke to Nairametrics exclusively denied any premium was paid, claiming the transaction closed at the prevailing market price as of April 27th, 2022.
An announcement of the transaction is however imminent on the Nigerian Exchange.
Mr Otedola announced in early April that he had acquired 5.05% of Transcorp making him the second-largest shareholder of the company. The purchase immediately triggered a rally for the share price of the stock, doubling in under two weeks.
In response to Mr. Otedola’s acquisition, Elemelu consolidated his holdings, increasing his ownership stake to about 25% which he announced on April 26th, 2023.
Brisk business for Otedola
Nairametrics first reported on the 12th of April, 2023 billionaire investor Femi Otedola had acquired 5.52% of Transcorp shares making him the second largest shareholder of the company.
The billionaire acquired over 2 billion shares of the conglomerate in stealth finally declaring the ownership after months of mopping up the stock. He then took his stake in the company to as much as 6.3% triggering a bidding war for the stock.
Armed with financial muscle, Elumelu’s camp moved to strengthen its control of the company moping up more shares even as they publicly welcomed Otedola to its fray. On Thursday, 27th of April Transcorp informed the Nigerian Exchange Limited (NGX) and the investing public of the acquisition of new shares by HH Capital Limited.
HH Capital Limited acquired 9,697,189,984 units of shares, bringing their total holdings in Transcorp to 9,991,173,177 units, representing 25.58% of the Company’s total shares. This fast-tracked a decision between both parties to hash out an exit for Mr. Otedola, who we understand was about to seek a board seat.
The Elemelu camp sees this as a win-win situation as the decision to buy Otedola out staves off a possible greenmail situation. Greenmail refers to the strategy of purchasing enough shares in a company to pose a threat of a hostile takeover, thereby compelling the target company to buy back its shares at a premium price instead.
In the context of mergers and acquisitions, greenmail serves as a defensive mechanism against the takeover bid. The targeted company repurchases its stock at a significant premium price to prevent the takeover, leading to substantial profits for the individual or entity behind the greenmail strategy.
Details of the transaction indicate both parties agreed to exit Otedola at a premium to his average cost of acquiring the shares over the last few months.
It brings to an abrupt end one of the most intriguing corporate moves in 2023. Transcorp share price was down 9.9% in the early hours of Friday. The stock was on full offer with over 100 million shares on offer with limited bids.