Kenya gas firms end takeover row

October 15, 2009

, NAIROBI, Kenya, Oct 14 – Industrial gas suppliers BOC and Carbacid Investments have agreed to an out-of-court settlement over the possible take over of Carbacid by BOC.

BOC had, in 2005, expressed interest in merging with Carbacid that would have seen it become the majority shareholder in the company. BOC had wanted to acquire 10.6 million shares in Carbacid totaling to a 94 percent stake in the company.

The ensuing stand off led to the suspension of listed companies from the Nairobi Stock Exchange after the Capital Markets Authority (CMA) ruled against BOC\’s takeover bid, hence the prolonged court cases.

Speaking on Wednesday, CMA Chief Executive Stella Kilonzo said both parties had executed consents necessary to withdraw the pending applications at he high court.
“Following a series of meetings we have decided to an out-of-court settlement. The consent stipulates that the matter be marked as ‘settled’ and that each of the parties bears its own costs,” she explained.

Because of the withdrawal, both parties have also waived all rights to file any further legal action on the matter. Mrs Kilonzo revealed that BOC and Carbacid Investments had applied to the NSE and CMA to have the suspension of their shares lifted.

“We have received the applications today since the matter was lifted today (Wednesday) and we are processing it expeditially,” she said.

BOC Chief Executive John Kariuki said he expects the shares to begin trading in the next two weeks but could not confirm whether that would be possible.

By the time both shares were being suspended, Carbacid was trading at Sh137 while BOC was at Sh160. Mr Kariuki said he anticipates the shares to resume trading at the last price traded.

However, Carbacid Managing Director Chandulal Shah said the capital market had taken a southward trend, globally, over the last four years and could not give a conclusive figure of how the shares would be.

“It will be interesting to see how both companies emerge from this but we expect we will come out strongly given our long absence and the interest generated over the period,” Mr Shah said.

In a takeover bid, shares are suspended from trading to cushion investors from fluctuating prices.

In May 2009, Centum Investment acquired a 22.6 percent stake in Carbacid.

BOC Chairman Joseph Kibe said the original deadline for the take over was set for April 2006. This was however; overrun by events when the CMA declared BOC had not raised the pre- requisite 80 percent approval from shareholders.

Once this became an issue, Mr Kibe said the company deleted that clause from the take over agreement so that they go ahead with the number of shareholders that had given consent to expedite the process.

“We even changed the minimum to 74 percent approval which we had realised at the time,” he said.

The parting of ways does not rule out further negotiations between the two gas companies. Both said the are open to any talks of a merger but could not give a timeline of when that would be possible.

Mr Kibe revealed the move did not quell ambitions of BOC of moving into the exploration of Carbon dioxide.

“Our offer has expired, and we will retain our money for other business especially in carbon dioxide," he said.

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