In what promises to be a long-drawn media battle, serial billionaire investor, Femi Otedola, last week drew the first blood by levelling allegations of backstabbing against his erstwhile business partner and Chairman of Transcorp Plc, Mr. Tony Elumelu, in a statement analysts believe would linger, writes Festus Akanbi
Finally, the shit hit the fan last week when the squabbles for the control of Transnational Corporation Plc between two billionaire friends, Femi Otedola and Tony Elumelu boiled over into what promises to be a long-drawn battle with the former accusing the latter of a series of betrayal.
However, analysts feared the media dimension of the boardroom war may affect the fortune of Transcorp Plc, as well as trigger other unforeseen developments as operators in the Nigerian investment climate begin to take sides and unearth other damaging information to overdo one another.
Interestingly, the controversy over the company is yet to fully manifest in the company shares although the share price fell from N1.79 kobo on Monday to N1.96 on Tuesday, a few hours after Otedola’s story came into the public domain.
Meanwhile, 32 million shares of the company exchanged hands at the Tuesday trading session on the Nigerian Exchange, with analysts saying the bickering may hit the company’s share in a matter of time.
Allegations
In a statement generously published by Nigeria’s leading news platforms, Otedola, a serial investor and chairman of Geregu Power Plc cried foul over how his bid to ramp up the market capitalisation of Transcorp Plc was ruthlessly rebuffed by the board of the company led by its chairman, Elumelu, saying he offered to acquire Transcorp Plc for N250 billion and take the company’s market capitalisation to N2 trillion but that his bid was rejected.
And in what analysts see as a subtle declaration of war and a direct criticism of the flamboyant lifestyle of the Transcorp chairman, Otedola alleged that most managers of business usually take advantage of other fringe stakeholders in terms of what accrues to them from the business, saying “Stakeholders are unfortunately always shortchanged by getting stipends while the owners and managers of the business live a jet-set lifestyle, which is detrimental to the stakeholders.”
Elumelu’s Recent Acquisition
A few weeks ago, Elumelu reportedly acquired fresh 9.7 billion shares of the company in separate deals. The businessman turned the tables on the conglomerate’s two previous biggest owners to take the prime spot.
Transcorp’s shares numbering 2.4 billion units exchanged hands in the open market in the period, implying most, if not all of Elumelu’s new shares were acquired off the market.
The move ramps up his combined stake in the group to 10.5 billion shares or 25.9 per cent. A breakdown revealed 273.1 million units were directly held, according to the 2022 financial report, while 273.5 million were held indirectly through Heirs Holdings. The rest were held through HH Capital.
“With this new acquisition, HH Capital Limited now holds a total of 9,991,173,177 units, representing 25.58% of the Company’s total shares,” Transcorp said in a statement.
Details of Otedola’s initial 5.5 per cent covert acquisition became public recently. He would later raise his stake to 6.3 per cent, placing him at that point in the second position behind UBA Nominees, which holds 9.3 per cent. UBA Nominees is the custodian business of the United Bank for Africa (UBA).
Investments analysts said Elumelu’s new acquisition confers on him more than one-quarter of Transcorp’s entire voting rights and also means those two will now take the back seat behind him among Transcorp’s top three shareholders.
Otedola’s Phenomenon
Analysts described the current scenario in the capital market as Otedola’s phenomenon, saying the move could cause more upsets on the boards of many quoted companies in Nigeria.
They recalled the speed at which the Group Managing Director of Access Holdings Plc, Mr. Herbert Wigwe had announced on the floor of the Nigerian Exchange Limited (NGX) that he had mopped-up N11.35billion shares to become the highest direct and indirect shareholder of the Pan-African financial institution few days after Otedola’s harvest of shares in Transcorp.
Wigwe bought 1,135,188,284 units of the financial institution at N10.00 per ordinary share through his Special Purpose Vehicle (SPV), Tengen Holdings (Mauritius) Limited.
This is estimated at N11.35billion as Wigwe’s indirect investment to solidify his position.
The Boardroom War
The media got wind of the boardroom war a few weeks ago when Otedola reportedly acquired a 5.52 per cent stake in Transcorp Plc to become the second largest shareholder of the company but then sold out his entire holding to Elumelu, the chairman of the group.
Elumelu had said he welcomed Otedola’s investment in the company and looked forward to working with him, adding: “He’s my very good friend. In fact, I only follow two people on Instagram, my wife, and Femi Otedola… that shows the level of friendship we have.”
However, there was a twist to the story last Tuesday when Otedola decided to give a picture of what transpired between the two leading businessmen.
In what watchers of the unfolding drama described as a long protracted battle, Otedola indirectly blamed unhealthy rivalry for the events that compelled him to opt-out from Transcorp Plc.
Alleging that Elumelu’s resort to subterfuge to edge him (Otedola) from Transcorp didn’t just start today, the Geregu Power chairman recalled that he had been betrayed on many occasions by Elumelu.
He recalled how he had bailed out Elemelu when the latter was on the verge of acquiring United Bank for Africa Plc in 2005 only to be outsmarted by his friend who had benefited from his large-heartedness.
In a tone that aroused pity, Otedola narrated how his bankruptcy in 2008 was capitalised upon by his business associate to acquire his stakes in UBA and Africa Finance Corporation in lieu of his (Otedola’s ) exposure to UBA.
“In 2005, while Tony was the Managing Director of Standard Trust Bank he approached me to get funds to acquire UBA. I enthusiastically gave him $20 million, which was N2 billion at that time to buy the necessary shares in UBA for the acquisition. After a short period, the share price increased, and I decided it was a good time to sell and get out of the bank. However, Tony appealed to me to hold on to the shares as he was convinced that there were future prospects – so I kept the shares,” Otedola said.
Continuing, he said, “I became Chairman of Transcorp Hotel in 2007 with a shareholding of five per cent and unknowingly Tony gradually started buying shares quietly.
“By the following year in 2008, I went bankrupt in Nigeria. Tony proceeded to take my shares in UBA to service the interest on my loans and he also took over my shares in Africa Finance Corporation, where I was the largest shareholder.
“Shortly after, Albert Okumagba informed me that an American firm wanted to acquire my shares in Transcorp, which I then agreed to sell. However, this supposed American firm turned out to be Tony Elumelu. The revelation of this prompted me to resign as Chairman of the hotel.”
Otedola said his plans to acquire the Ughelli Power Plant were thwarted by Elumelu, who allegedly overbid him as a result of prior information on Otedola’s plan to go for the power sector.
He explained that his bid to buy Transcorp Plc for N250 billion, which was rejected was informed by his decision to maximise the company’s potential as a Nigerian conglomerate with a market cap of at least N2 trillion instead of the current N40 billion, but it seems some shareholders have a different vision.
“As a businessman, I believe in healthy competition and market dynamics. Two captains cannot man a ship, and I respect the majority shareholder’s decision to buy me out. This is the nature of the game.”
Insisting that his offer came from a genuine intention to add value to the company, Otedola said, “But let me be clear: my offer was made with the best intentions for Transcorp Plc and its shareholders. I saw an opportunity to unlock the company’s full potential and create value for everyone involved.
“My message to Transcorp Plc and its shareholders is this: I remain committed to the growth and success of Nigerian businesses, and I will always be looking for ways to create value for all stakeholders.”
Like Transcorp, Like Geregu Power
For whatever reason Otedola has sold 2.8 million units of his shares in the power generation company, Geregu Power Plc, where he is holding the majority stake. He offloaded the shares via two transactions executed on different dates.
The first involved 1.9 million shares sold at N288.9 each on 8 May; the second 948,092 shares sold at N290.7 per unit on 9 May, according to a regulatory filing. Both deals summed up to N817.3 million.
A separate share dealing document at the Nigerian Exchange last Wednesday showed Paul Olurotimi Otedola, the sibling of the energy tycoon, procured 300,000 units of the company’s shares at N288.9 per unit on May 8. His interest in the company now totals 4 million shares, having acquired 3.7 million shares earlier this year at N809.2 million.
THISDAY could not immediately reach Elumelu for his reaction. Multiple telephone calls placed to the Head of External and Media Relations at UBA, Ramon Nasir, were not responded to.
Last modified: May 14, 2023
