Nigeria Content Online

While the
management of the Nigeria Bottling Company, the bottlers of Coca Cola,
is still unyielding on its plan to delist its shares from the Nigerian
Stock Exchange, some operators have condemned the action saying it is a
bad omen for the market.

NBC had last month
announced that its parent company,Coca-Cola Hellenic Bottling Company
S.A., intends to invest up to N45 billion in Nigeria between 2011 and
2013 in order to strengthen its commercial base.

Consequently, the
proposed transaction will involve the cancellation of part of the share
capital of NBC, so that it would become a wholly-owned subsidiary of
Coca-Cola Hellenic.

The proposal includes a cash payment of N43.00 per NBC share as consideration to the minority shareholders.

For an investor who
has been a shareholder of the NBC for over a decade, the delisting plan
is “nonsense.” Albert Edun, an executive member of the Nigerian
Shareholders Solidarity Association, said, “I still don’t know why they
are doing that even with all the explanations they have given for the
action. I bought NBC shares longtime ago; over 10 years now. Yes, it is
true that the company paid its shareholders good dividend when the
going was good.

But we must not
forget that the same shareholders endured the pains of no dividend when
NBC could not reward its investors.” “Now they want to delist and pay
us ridiculous N43 per share. All that is nonsense and shareholders must
condemn such act. You see, all these Greek investors are funny.
Indirectly they are telling us they no longer have confidence in the
Nigerian stock market.

They want to delist their company but also want to continue to do business in our country without been listed,” Mr. Edun said.

He said this is the
time investors need government’s intervention. “Government must come to
our rescue and not allow this kind of thing to happen,” he added.

Negative impression

Tunde
Oladapo-Dixon, Chief Executive Officer, StockPicks Consulting, a stock
broking firm, said the delisting plan of the NBC “is a bad omen for our
capital market because the company is one of our defensive stocks. It’s
a blue chip stock.” Mr Oladapo-Dixon said, “For them to be leaving the
market, it creates a lot of negative impression to the likes of MTN,
Glo and other big giant companies that may be wooed to the market. The
delisting plan really does not give our market much reputation, ”
adding that “it will not be a good step if the Exchange and the
government allow NBC to be delisted from the stock market just like
that.” The National Chairman of the Progressive Shareholders
Association of Nigeria, Boniface Okezie, said with government’s
intervention in the matter, “confidence will return to the market and
the market in return can help the government to grow the economy.” Mr
Okezie said, “I think it is time for the government to discover the
importance of the capital market in wealth creation.

Blue chip companies
like NBC should not be lost. In fact, we even need more companies to
come on board.” Victor Ogiemwonyi, chief executive officer of
Partnership Investment Company, a stock broking firm, in an article in
NEXT last Tuesday said that the price of the NBC stock is well above
the N43 offer.

“A great majority
of analysts think investors should get more for their stock if they
sell at all. They put the value at anywhere between N67, an earnings
basis valuation and also closer to its peak price during the last bull
market, or around N105 using its book value before revaluation,” Mr
Ogiemwonyi said.

Profit declines

In its interim
financial result for the first quarter ended March 31, 2010, the NBC
recorded a 76.96 per cent decline in profit after tax of N243 million,
as against the N1.055 billion posted in the comparable period of 2009.
However, NBC’s turnover during the period shows an increase of 15.46
per cent; from N23.199 billion in 2009 to N26.787 billion in 2010.

The Coca Cola
bottler had, in its third quarter ended September 30, 2009
results,recorded a 135.21 per cent increase in profit after tax of
N2.291 billion,as against N974 million in 2008; while its turnover in
the period in view grew by 14.63 per cent from N56.474 billion in 2008
to N64.740 billion in 2009.

NBC last declared
bonus to its shareholders in April 2004 and only proposed a dividend of
50 kobo last year May following its 2009 financial year end. The
dividend was expected to be paid last year December 31.

Meanwhile, the
spokesperson of the NBC, Adeyanju Olomola, has refuted claims that some
Nigerian employees of the company were recently replaced by Greeks and
Europeans following the new investment plan of the company.Mrs Olomola
said, “We did not replace Nigerian employees with Greeks or Europeans.
The company reviewed its operations in a bid to optimise same and
embarked on a restructuring exercise last month (November). This
affected some of our employees; however,we ensured fair and equitable
compensation not only in line with, but beyond what is stipulated by
regulatory requirements.”