The share price of Carbacid Investments has rallied 15.2 percent after a tribunal dismissed an appeal that sought to stop the company’s proposed buyout of medical and industrial gases manufacturer BOC Kenya.
The stock closed at a new 52-week high of Sh19.6 yesterday, rising from Sh18.4 on Monday and Sh17 on Friday last week. The Capital Markets Authority Tribunal’s decision was issued on Thursday last week but the news broke out this Monday.
The share price gain comes ahead of Carbacid’s results for the year ended July 2024, with the publication of the earnings expected to be made next month.
Carbacid’s takeover of BOC Kenya would form the largest gases company in the region.
Carbacid deals in carbon dioxide which is used in fizzy drinks while BOC Kenya sells oxygen to hospitals and other industrial gases that are used in welding, among other applications.
The tribunal dismissed businessman Ngugi Kiuna’s appeal challenging Carbacid’s offer price of Sh63.5 for each share of BOC Kenya, arguing that the proposed transaction undervalues the target company.
The tribunal said Carbacid’s offer, which is supported by BOC Kenya’s parent firm BOC Holdings that has a 65.38 percent stake, does not lock out a potential competing offer.
The tribunal also noted that the regulator –the Capital Markets Authority— cannot decide whether or not an offer price is fair to shareholders.
Dyer and Blair Investment Bank, the independent adviser hired by the board of BOC Kenya, said the offer undervalued the company which had a per share value of Sh91.76 as of early 2021.
The BOC Kenya board told shareholders to make up their own mind with regard to the fairness of the offer. Mr Kiuna has, meanwhile, been buying more shares of BOC Kenya whose price has surpassed the offer by Carbacid to trade at Sh76.
Carbacid and its affiliate Aksaya Investments LLP offered to buy 100 percent of BOC Kenya. Aksaya is owned by billionaire businessman Baloobhai Patel who is also the top shareholder in Carbacid with a 49.9 percent stake.
The offerors earlier said a combination of the two firms will result in lower costs and better pricing of the expanded product portfolio.
“The enlarged group will be in a stronger position to capitalise on significant growth opportunities by leveraging its expanded non-competing portfolio of products and wider customer base, in addition to securing optimal pricing and terms from key suppliers,” they said.
“Closer integration where possible and practical, of Carbacid and BOC’s operations will provide opportunities to extract synergies in administration, marketing, distribution, selling, and information technology,” the parties added.
The proposed buyout, initiated in November 2020, had been suspended in the wake of Mr Kiuna’s appeal.
