UACN’s paint-making subsidiaries, CAP and Portland Paints to merge into single entity

Chemical and Allied Products (CAP) Plc and Portland Paints & Products Nigeria Plc, both of them subsidiaries of UAC of Nigeria Plc (UACN) are on track for a merger and business consolidation that will see the two firms become a single entity.

CAP will emerge as the surviving entity at end of the process when the merger gets a regulatory approval and other terms are consummated.

In separate statements to the Nigerian Stock Exchange on Monday, the paint-makers avowed that the decision is spurred by the strategic visions of the their boards of directors to drive expansion and growth within the Nigerian and African markets, a development they hope will be appealing and value accretive to the shareholders both companies.

CAP and Portland Paints, which operate in different segments of the paint market, hope the fusion will create a more expansive portfolio that will consolidate the individual strengths of the companies in the premium decorative segment, “the mid-market decorative segments as well as the industrial segment (in particular marine and protective coatings)” and position it as a formidable competitive force in the paint market.

The restructuring will be achieved by way of scheme of merger, the statements said. Consequently, CAP is offering shareholders of Portland Paints N2.90 to buy each unit of Portland Paints ordinary shares held or, in the alternative, 1 new ordinary share of CAP in exchange for every 8 Portland Paints shares held.

Read also: Loss-making UACN Property to sell 51% stake to Custodian Investment

“The proposed consideration (N2.90) represents a 45% premium to the last traded share price of Portland Paints on October 16, 2020, being the last business day prior to the date on which CAP sent its merger proposal to the Board of Portland Paints and a 41% premium on the trading price as at close of trading on October 23, 2020,” the statements said.

Stocks in CAP closed on the NSE on Monday at N18.50 per share while those of Portland Paints closed at N2.05 a share.

“The decision to pursue the proposed merger is driven by the Board’s strategic plan to aggressively grow within the Nigerian and African markets.

“We believe that the Proposed Merger presents a unique opportunity that will benefit all stakeholders, from shareholders to customers as well as the broader economy,” said David Wright, managing director of CAP.

On his part, Bolarin Okunowo, managing director of Portland Paints, said “in recent months, the Board and management of Portland Paints have evaluated various strategic options with a view to positioning our company to capture emerging growth opportunities.

“CAP’s business is complementary to ours, and both companies will be better able to serve our respective customers by coming together. I believe the combination of Portland Paints and CAP will yield significant benefits for all of our stakeholders.”

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