Oando to acquire $13.7m worth minority shares of its Canadian listed subsidiary

Oando Plc said it has reached an agreement to acquire the minority shares of its Canadian listed subsidiary, Oando Energy Resources (OER).

In a notice to the Nigerian Stock Exchange, Oando said the deal worth about US$13.7 million with the equity value for the company put at US$955.3 million.

“The Consideration represents a 177.2% premium to the 20-day volume weighted average price of the Common Shares on the Toronto Stock Exchange for the period ending December 21, 2015, using the Bank of Canada US$ to CDN$ closing exchange rate of 1.3965 on December 21, 2015. The transaction provides total consideration to holders of Minority Shares of approximately US$13.7 million and implies an equity value for the Company of approximately US$955.3 million,” the release stated.

“The Board of Directors of OER has unanimously (with Messrs. Tinubu and Boyo abstaining) determined that the Plan of Arrangement is fair to shareholders (excluding Oando Plc and the Institutional Shareholders) and it would be in the best interests of the company to enter into the Arrangement Agreement.”

According to the company, the determination of the board was made upon the recommendation of a special committee of independent directors, and after consideration of the advice of legal and financial advisors to the Independent Committee and the Company.

The release also stated that “Oando Plc holds, either directly or indirectly, 746,107,838 of the Common Shares, representing approximately 93.7% of the issued and outstanding Common Shares. Pursuant to the Plan of Arrangement, the Purchaser will acquire all of the Common Shares that are held either directly or indirectly by the Institutional Shareholders and Oando Plc. In consideration for such transfer, they shall receive such number of shares of the Purchaser as reflects the number of their contributed Common Shares for the purposes of completing the transactions contemplated by the Plan of Arrangement.”

Speaking on the deal, Bill Watson, Chairman of the Independent Committee stated that “This proposal represents a significant premium to the 20 day volume weighted average price of the Common Shares prior to today’s announcement. We recommend that shareholders vote in favour of the Plan of Arrangement at the special meeting of shareholders to be held for the purposes of approving the transaction.”

The implementation of the Plan of Arrangement will be subject to approval by the holders of the affected securities at a special meeting expected to be held on February 25, 2016. The transaction also will be subject to applicable regulatory approvals and certain closing conditions customary in transactions of this nature.

Oando Plc recently declared record losses in its 2014 full year and nine months of 2015, attributing it mostly to impairments taken in the wake of the drop in oil prices.