The Capital Markets Tribunal has dismissed Kiuna Ngugi’s – a former BOC Kenya chair and minority shareholder – appeal challenging the takeover of BOC Kenya by Carbacid Investments PLC and Askaya Investments LLP.
- In November 2020, Carbacid and Askaya Investments issued a notice of intention to acquire 100 percent of the issued ordinary shares of BOC Holdings for KSh 63.5 a share.
- Kiuna challenged the approval of the takeover deal in 2021 on grounds that the Capital Markets Authority granted the approvals ignoring the rights and interests of the Minority shareholders adding that material information was withheld from minority shareholders and consequent misleading information of the same.
- Kiuna Ngugi owns 1,484,700 issued ordinary shares in BOC Kenya representing 7.6 percent shareholding. BOC Holdings (UK), the majority shareholder, committed to selling its 65.38 percent stake.
“It is our humble view that the Respondents complied with the provisions of the Capital Markets Act and the Capital Markets (Take-overs and Mergers) Regulations in regard to the Takeover Transaction. Thus, we see no reason why the approval granted by the 1st Respondent should be set aside,” Capital Markets Tribunal stated in its ruling.
The tribunal dismissed the appeal in entirety ruling that approvals by the CMA still stand with costs to be awarded to respondents.
“Although the parties validly entered into an Irrevocable Undertaking that was relied on by the Co-offerors, this cannot be used to lock out Competing Take-Over Offers. A deep scrutiny of the Regulations points out that there are no exceptions in making a Competing Take-Over Offer” the Tribunal noted.
The Irrevocable Undertaking from BOC Holdings, which holds 12,765,582 ordinary shares in the BOC Kenya PLC – 65.38 percent share – was deemed compliant with the regulatory framework.
“All Take-Over Offers that are made are subject to the Regulations. Effectively, they are subject to Competing Take-Over Offers (if any). Locking out competing offers would be tantamount to market distortion,” the Tribunal added.
Kiuna Ngugi’s case was formerly dismissed in the High Court but stalled on appeal because the tribunal lacked quorum. In 2005, BOC had tried to buy Carbacid but the deal did not sail through on the back of regulatory hitches.
BOC was founded in 1940 and deals in industrial and medical gases with three market competitors – Carbacid Investments, Flame Tree Group and Crown Paints. Carbacid is a liquefied carbon dioxide manufacturer dealing in gases and gas mixtures.
BOC joins Bamburi in companies that might face possible delisting at the Nairobi bourse in the event the takeovers come to fruition. BOC Kenya closed the previous trading session at KSh 76.00 (-7.3 percent year-to-date loss) with Carbacid edging up to close at KSh 18.50 (8.2 percent year-to-date gain).
