The Capital Markets Authority said on Wednesday it had begun an investigation into irregular share trades in relation to a takeover offer for KenolKobil by French fuel storage and distribution company Rubis.
Rubis made a takeover offer for KenolKobil earlier on Wednesday that it said valued the Kenyan oil marketer at about Sh35 billion.
The regulator said its market surveillance had identified potentially irregular trading of KenolKobil shares in the run up to the Rubis bid announcement.
“Consequently, in connection with these investigations the Authority has instructed the Central Depository and Settlement Corporation to place a freeze on the suspected accounts to allow for the conduct of the necessary inquiries,” the regulator said in a statement.
The volume of trading in KenolKobil’s shares on the Nairobi stock exchange jumped to 373.46 million on October 23 from 29.51 million a day earlier, according to Refinitiv data.
Rubis, which is active across Europe, Africa and the Caribbean, has purchased nearly a quarter of the shares of KenolKobil on the open market and wants to buy the remaining shares, the companies said in bourse filings.
Rubis has offered to buy them for Sh23 each, 53.4 percent above their weighted average closing price over the previous 30 days. That values all of KenolKobil at about Sh35 billion, according to the French company
KenolKobil shares closed at Sh15.85 on Wednesday, after surging 31 percent to a record high of Sh21.75.
“It is a pretty decent offer,” said Eric Musau, a research analyst at Standard Investment Bank.
Rubis said it had struck agreements with two shareholders, including long-serving KenolKobil CEO David Ohana, to buy shares representing 9.69 percent of the company.
Rubis plans to expand parts of the Kenyan business, such as liquefied petroleum gas (LPG), once the deal is concluded.
“We have become specialists in LPG and bitumen for instance, the demand for these kind of products is very strong in Kenya and other countries, to address that demand we have to invest in logistics,” Bruno Krief, Rubis chief financial officer.
KenolKobil also operates in Ethiopia, Uganda, Rwanda, Burundi and Zambia. The deal will give Rubis, which has a market value of about $4.7 billion, an foothold in East Africa, where it currently does not have any operations.
If Rubis gets 90 percent of KenolKobil, it plans to invoke rules allowing it to acquire the remaining shares, it said. If it gets 75 percent but less than 90 percent, it may take steps to delist the shares from the Nairobi Securities Exchange, it added.
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KenolKobil’s profits increased in 2017 and the company has reduced its debt from $170 million in 2014 to almost zero.
“They were clearly beautifying the asset for sale,” said Aly Khan Satchu, an independent trader and analyst in Nairobi.
A previous takeover bid for the company by Switzerland-based Puma Energy, a subsidiary of Trafigura Beheer BV, fell through in 2013 after months of talks.
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