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Foreign investors exit Seplat, amid NNPC lawsuit blocking ExxonMobil acquisition deal



Foreign investors’ confidence in Seplat Energy Plc has dropped, as some exited their investment in the Nigerian oil company following a setback in the acquisition of ExxonMobil shallow waters business in Nigeria.

Seplat Energy had announced in late February that it had entered into Sale and Purchase Agreement to acquire entire shares of Mobil Producing Nigeria Unlimited (MPNU) from ExxonMobil.

The purpose of the acquisition was to increase Seplat’s revenue, however, more than four months later, the deal has still not been approved by the Nigerian government, which is using its agency, Nigerian National Petroleum Company Limited (NNPC) to block the acquisition.

Foreign investors react negatively amid court battle over Seplat and ExxonMobil deal

NNPC is against the acquisition of the oilblock asset, which it co-owns with ExxonMobil, and intends to use its first refusal rights under their Joint Operating Agreement (JOA) to stop the deal and takeover of the oilfield.

Seplat had offered over $1.2 billion to purchase MPNU, the local firm overseeing ExxonMobil’s stake in the oilblock. In a bid to stop the deal, NNPC went to court on July 5 to get a restraining order against the transfer or sale to Seplat, but the lawsuit was made public on Tuesday.

Read also:Seplat’s bid to acquire Mobil Producing Nigeria hits brick wall, as govt rejects deal

Ripples Nigeria gathered that as trading resumed in the London Stock Exchange on Wednesday, Seplat share depreciated in value by -0.24% due to sell off among investors, with fear that if the company fails to acquire MPNU, its management would be unable to significantly grow its earnings.

This means value on investment held by stock market investors in Seplat will record little or no growth, as the company will have no reason to increase dividends in the future, compared to if the acquisition was done.

Which makes Seplat’s growth in the future blurry, discouraging new investors from demanding the firm’s stock on the exchange floor. This often causes the share to fall in near to midterm period, and result to losses on shareholders investment, hence, the sell off on Wednesday.

The sell off pulled Seplat share down to £104.25, below the £104.50 it sold for on the exchange floor on Tuesday. During intraday trading earlier today, traders exchanged the stock for as low as £101.50.

Trading is still ongoing, but so far, investment still held by other shareholders is down -0.24%.

What is Seplat saying about NNPC court case over MPNU acquisition

Investors are selling off despite Seplat releasing a statement on Tuesday that the court case wouldn’t affect the acquisition of MPNU. The company said the lawsuit is between NNPC and ExxonMobil over the rights issue relating to the JOA, and nor Seplat.

It assured that while the matter was awaiting resolution by the State High Court in Abuja, the SPA is still valid and subsisting, “and the Company remains confident that the matter will be brought to a proper conclusion in accordance with the law.”

However, the statement has done little or nothing to calm investors based on the ongoing capital market activity around Seplat shares on the exchange floor.

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