Corporate announcements have been salient in the bourse in the review period. To be exact, the price action at the bourse has been weighed down by COVID-19 headwinds and corporate announcements have injected some freshness. We highlight some of them in this article.
Carbacid Investments Plc served BOC Kenya Plc late November with a notice of intention to acquire all the ordinary shares of the latter at a price of KES63.50 per share. Due to the fact that BOC Kenya owns 14.85Mn shares in BOC Kenya (representing an ownership stake of 5.83%) and to be in compliance with Section 108 of the Companies Act, 2015, Carbacid’s acquisition offer is a joint affair together with Aksaya Investments.
BOC Holdings, which has a 65.38% ownership stake in BOC Kenya, issued an irrevocable undertaking to the co-offerors to accept the acquisition offer albeit with certain conditions. That means that the shares to be tapped in the open-market by the co-offerors are 35.62%. That being the case, an independent valuation opinion report had BOC Kenya’s fair value at KES91.76; 44.5% a premium to the offer price of KES63.50. Simply put, the opinion in the independent valuation is that the offer is not fair and reasonable. That being the case, the offer for acceptance is open until 6th April.
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The second pivotal corporate announcement was the proposed buyback by Nation Media Group. The listed media entity in late February announced acquisition of 10% of its outstanding shares. To be exact, the number of shares on slate for the buyback totals 18.9Mn. That being the case, the announcement lacks details on the counter’s share buyback. Most importantly, the raison d’etre for the share buyback remains a matter of conjecture. Arguments for share buybacks include rewarding shareholders by enhancing stock prices and also seen as another way of returning profit to shareholders. Against this backdrop, it’s hard to see how the listed media company ticked those two boxes in light of the company’s profit warning for last year’s financial earnings.
This leads us to the mode of financing the share buyback and it will be interesting to see how the listed media firm will go about it. The other metric that will be keenly monitored is the price of effecting the share buyback. The counter has been on a gradual decline, last touching three-digit levels in mid-2018, and now is flirting with low 20 levels. Therefore, the signaling effect of the share buyback by the listed counter’s board had a positive reception, rallying 89.2% to recent highs of KES25.35 levels, but has since moderated due to profit-taking activities.
Other notable corporate announcement include the unscheduled interim dividend payment by Safaricom that propelled the telco firm to a record high KES39.25. On the other end of the spectrum, Sanlam Kenya Plc released profit warning announcement in early March but nonetheless, the counter recorded a 25.3% uptick month-to-date. We still expect the corporate announcements to dictate price actions at the bourse in the near-term.