Forte Oil eyes merger, acquisition

Forte Oil Plc plans to acquire or merge with companies that share similar values and growth outlook with the indigenous energy firm as it moves to consolidate its business.

Group managing director, Forte Oil Plc, Mr. Akin Akinfemiwa, who disclosed this yesterday at the Nigerian Stock Exchange (NSE), said the company would consider merger and acquisition options as part of its growth strategy, especially with partners that have similarities with its corporate governance strategy.

He said the company plans to diversify into the upstream space through acquisition of profitable upstream assets and partnerships with quick service restaurants, financial institutions and telecommunications firms.

According to him, the outlook for the company remains promising as it had entered into strategic partnership and alliances with technical partners to participate in the proposed Federal Government sale of marginal oil fields and divestment of International Oil Companies (IOC) investment in local oil blocks.

Akinfemiwa said the company also plans to raise additional capital to boost its balance sheet and support the growth of the company over the long-term.

He said the new capital raising would involve both equity and debt issues noting that the net proceeds of the new issues would be used to bolster the company’s working capital and enhance the overall balance sheet.

“There is an ongoing plans and commitment with potential investors to inject additional capital through debt or equity within the next few weeks. This, we believe, would significantly impact our negative working capital and also shore up our shareholders funds,” Akinfemiwa said.

Read also: SEC issues deadline for mergers, acquisitions

He added that the company would optimise opportunities from its real sector assets to grow complimentary businesses which would ultimately increase its bottom line while it also plans to optimise its distribution channel through focusing on retail network optimisation and strategic acquisition of prime retail sites.

According to him, the company would improve operating margins and diversify revenue base by focussing on high margin products such as lubricants and expanding the Geregu power plant assets with additional 21 mega watts.

Key extracts of the interim report and accounts of Forte Oil for the for the half-year ended June 30, 2015 showed a turnover of N61.17 billion, 23 per cent below N79.61 billion recorded in the comparable period of 2014. Profit before tax stood at N3.26 billion compared with N4.19 billion while profit after tax dropped by 19 per cent to N2.53 billion as against N3.13 billion posted in the comparative period of 2014.

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