Preline Ltd takes over Eterna as N5bn deal triggers management overhaul

Eterna Plc is now under new management after seven substantial investors sold their stake in the oil and gas firm to Preline Limited.

Ripples Nigeria had reported that Preline is looking to acquire a 60.89 percent stake to substantially increase its control over Eterna, whose share value has increased by 36.2 percent [snapping N2.3kobo along the way] since the news broke on August 23.

The bullish run which produced an increase in the company’s share price from N6.35kobo to N8.65 per share followed a two weeks decline shortly before Preline’s attempt to takeover Eterna was made public.

The 60.89 percent stake is estimated at about N5 billion when compared to the average share price in August.

Although Eterna did not disclose the price Preline acquired each of the 794,969,774 ordinary shares.

Ripples Nigeria gathered that the 794.96 million shares were acquired from Lenux Integrated Resources Limited, Global Energy & Raw Materials Limited, Meristem Wealth Management Limited, Radix Capital Partners Limited, GASL Nominee Limited, GTI Capital Limited, and Cardinalstone Partners Limited – all of which are substantial shareholders of Eterna.

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The deal has been approved by industry regulators, Federal Competition and Consumer Protection Commission (FCCPC), the Securities and Exchange Commission (SEC), and the Nigerian Exchange Group (NGX).

Market’s reaction to Preline deal with Eterna

Following Monday’s disclosure that the seven substantial shareholders and Preline Limited have executed a Sale and Purchase Agreement (SPA), the stock market has reacted negatively to the development.

Ripples Nigeria analysis revealed that Eterna’s share dropped by 9.94 percent from N8.65kobo to N7.79kobo per share, losing N0.86kobo to sell off by minority shareholders following the path of the substantial investors.

This caused shareholders to lose N1.12 billion out of their investment in Eterna in one day as the oil firm’s market capitalization crashed from N11.28 billion to N10.15 billion.

Management change looms

The sell-off by the majority shareholders is expected to lead to the resignation of some board members representing the seven investors in Eterna Plc.

They will vacate their positions for Preline Limited representatives as the company becomes the sole substantial shareholder in Eternal Plc.

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