Affelka Raises Tender Offer to Minority Shareholders of Seven-Up to N125

The majority shareholder in Seven-Up Bottling Company Plc, Affelka S.A who is offering to buyout the minority shareholders of the company has raised the tender offer price to N125.

Affelka holds 73 per cent of the equity of Seven-Up and it recently informed the investing public of its plan to completely buyout minority shares in Seven-Up for a consideration of N112.70 per share.

While the company has received a “no objection” from the Securities and Exchange Commission (SEC), the shareholders will today (Thursday, January 11), are expected to give their approval, Affelka has raised the offer price for the acquisition of the outstanding 171,542,574 to N125.

The new offer price represents a premium of about 23 per cent considering the N101.97 closing price of the stock as at yesterday.

Already investment analysts at Afrinvest West Africa, have advised minority the shareholders of SevenUp Bottling Company Plc to accept the tender offer from the majority shareholder, Affelka S.A.

According to Afrinvest, given the recent weak financial performance, historical illiquidity characterising Seven-Up’s stock - which will possibly worsen post-acquisition - and the premium offered by Affelka relative to the current market price, they recommended investors tender their shares for the price consideration.

The analysts explained that in its latest 2017 full year financial results, Seven-Up’s performance deteriorated on the back of rising direct and indirect cost profiles as well as finance charges despite growing revenue considerably.

The Company recorded a N108.3 billion expansion in revenue and a loss after tax of N10.8 billion.

Similarly, in its half year (H1):2018 report, SevenUp recorded a loss after tax of N3.8 billion. Following the planned acquisition of the ordinary shares of investors, minority investors are faced with the decision to either “Sell” or ‘Hold”.

Afrinvest explained that on the consideration of the options, its overall analysis favours a “Sell” decision premised on the illiquidity, weak investor sentiments and premium pricing.

“In the event that the shares of minority shareholders are being bought over, investors who decide to hold would be faced with illiquidity challenge associated with the stock. As such, prices of the stock will remain rather unreflective of fair market pricing, thereby indicating an increasing likelihood of a substantial loss in value of investments,” they said

According to them, despite investor’s negative sentiment for the stock, their our outlook for FY:2017 performance remains rather bleak given the company’s high leverage and cost inefficiency.