The battle for the ownership of Nigeria’s biggest conglomerate between two of Nigeria’s finest business tycoons, Tony Elumelu and Femi Otedola, has finally come to an end as Femi Otedola has sold his Transcorp shares with a premium to Tony after mutual friends led by Aliko Dangote intervened in the battle, putting an end to an intriguing corporate drama that has shocked, rocked, and rolled Nigeria’s capital markets over the past several days.
According to multiple sources that I spoke to, the two businessmen share so many mutual friends, and one of them is Aliko Dangote.
As a result, when the news first surfaced two weeks ago, Aliko Dangote and other members of their shared social circle began pressuring Femi Otedola to abandon his lofty goal of carrying out a hostile takeover of Transcorp, which was Otedola’s original plan.
According to a media outlet, Billionaire Africa, a privileged source who enjoys proximity to the two billionaires and who requested anonymity claims that, as a way of settlement, Elumelu paid Otedola a 400-percent premium on Transcorp’s closing price on Thursday night to acquire his bloc of shares.
This would mean that Otedola, who owned 2.6 billion shares, or 6.3 percent of the company, was paid somewhere in the neighborhood of NGN 12.5 per share and walked away with N32.5 billion cash out.
Despite the fact that the two men share close relationships and call each other brothers, Tony was not aware of the move by Femi Otedola to invest in his company as he woke up to the news, just like many of us were.
Sources close to Otedola confirmed that the chairman of Geregu Power was keen on wrestling control of Transcorp from Elumelu and was eyeing its lucrative power assets.
While Otedola’s publicly traded Geregu Power has one power plant in Kogi State with an installed capacity of 435 MW and boasts a market cap of more than $1.6 billion, Transcorp has two power plants in Delta and Rivers states with a combined capacity of over 2,000 MW, but its market cap sits at less than $300 million.
Analysts had long maintained that Transcorp was significantly undervalued.
Otedola purchased the underperforming state-owned power asset in 2013, with an effective capacity of less than 100 megawatts (MW), and increased its capacity to 435 MW, with 70–80 percent of the power generated being supplied into the grid.
Geregu Power, whose shares have doubled in just six months, recently paid out N20 billion in dividends to its shareholders for the 2022 fiscal year.
Transcorp’s stock, on the other hand, had perpetually languished in the neighborhood of N1 per share for years, with lackluster dividends paid over the past few years.
Otedola had already started making demands for board seats on Transcorp’s board and was still buying shares in the company every day.
But Elumelu fought back. Within a space of days, Elumelu acquired an additional 9.7 billion shares in separate deals to ramp up his combined stake in the group to 10.5 billion shares, or 25.9 percent, cementing his position as Transcorp’s main shareholder.
With the intervention of their friends and the subsequent cash out by Femi Otedola as a way of pacifying him, I have learned that all is fair in war, there is no friendship in business, and most importantly, all is well that ends well.
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