TAKEOVER BID

Carbacid's acquisition of BOC Kenya takes shape

The two entities have fulfilled their legal obligation to serve on BOC an Offeror’s Statement.

In Summary

•Carbacid  is making a move in collaboration with Aksaya Investments LLP.

•The deal , if approved, will see Carbacid acquire 100 per cent share of the renowned supplier of industrial, medical and special gases in East Africa.

BOC gas filling plant in Industrial area. Photo/File
BOC gas filling plant in Industrial area. Photo/File

The intended offer to acquire BOC Kenya by Carbacid Investments Limited has moved a stage further, with the two entities fulfilling their legal obligation to serve on BOC an Offeror’s Statement.

This is an offer to enter into a contract which will guide the take-over of the entity,including its financial status, where Carbacid  is making a move in collaboration with Aksaya Investments LLP.

Carbacid Investments has made a  Sh1.2 billion bid on its NSE listed peer, BOC Kenya, in what will see it acquire 100 per cent share of the renowned supplier of industrial, medical and special gases in East Africa, subject to an agreement and regulatory approvals.

In response to the service and in compliance with the Capital Markets Regulations governing takeovers and mergers for listed firms, BOC Kenya PLC on  December 12,  published the Offeror’s Statement acknowledging the intention by CIL and Aksaya Investments LLP to acquire up to 100 per cent of its ordinary shares.

The statement issued by BOC Kenya indicates that CIL and Aksaya Investments LLP are confident of BOC Kenya’s business prospects and are seeking to acquire the firm as part of a long-term investment strategy, an official statement on Monday noted.

While BOC Kenya produces and supplies industrial, medical and special gases, CIL’s main operating subsidiary Carbacid (CO2) Limited is the region’s leading producer of food-grade carbon dioxide extracted from natural underground reservoirs in Kenya.

The Offerors are aware that between the fiscal year 2015 and the fiscal year 2019, the Earnings before Interest, Tax, Depreciation and Amortisation (EBITDA) of BOC has dropped by a Compounded Annual Growth Rate (CAGR) of 10.9 per cent to Sh145 million from a high of Sh230.3 million.

"The Offerors acknowledge the changes in the performance of the business; however they believe in the underlying long term prospects of BOC’s business and product offerings and therefore have confidence in making this offer,” the Offeror’s Statement explains.

Among other elements, the Offeror’s Statement also confirms that at the close of the takeover deal, the existing contractual and statutory employment rights of all BOC Kenya employees will continue to be in force in accordance with the law.

CIL Chairperson Ambassador Dennis Awori recently confirmed that BOC Kenya’s United Kingdom-based majority shareholder, BOC Holdings, supports the intended offer and has issued an irrevocable undertaking to sell its 65.38 per cent  stake in BOC Kenya. 

"The proposed acquisition of BOC Kenya by CIL and Aksaya is an excellent match that will, in the longer term, position the enlarged group to become the leading regional supplier of choice for carbon dioxide gas and related products, industrial, medical and special gases, and related equipment and services," Awori said.

The buyout is a reversal from a 2005 deal where BOC Kenya,  a subsidiary of Germany's Linde, had placed a bid for the carbon dioxide manufacturer after it was suspended from the bourse in 2005 on cash flow issues.