Business: CMC takeover deal hits new headwinds

By Winsley Masese

CMC Motors, a subsidiary of CMC Holdings

Shareholders of listed auto dealer CMC Holdings will have to wait longer to realise gains from a takeover bid placed by a Dubai-based firm.

With the market shutting down for the end year season, it has been an uphill task to get sufficient numbers to execute the takeover and delist CMC from the Nairobi Securities Exchange (NSE). CMC chairman Joel Kibe said the delay is due to failure by Al-Futtaim Auto & Machinery Company to meet the minimum price requirement.

He said the Dubai-based company might not have had enough time to raise enough capital from investors because of the long December holidays. “This is the normal way for a buyout and we cannot confine them to a certain period,” he said.

The Dubai-based company had two months, October and December, to complete the buyout.  In some circumstances, the situation allows other bidders to come in but Kibe said they had signed an agreement that cannot be revoked. 

“But once the minimum threshold is met, then the takeover can be declared. The buyer was supposed to raise 75 per cent of the total cost of CMC for the takeover but has only reached 50 per cent.

 Consequently, CMC Holdings has postponed its extraordinary general meeting scheduled for tomorrow (Thursday).

According to a paid up advert appearing in the dailies yesterday, the Kenyan automaker said the postponement was the result of a request for an extension of the expiry date for the proposed takeover offer and the pending approval of the request by the Capital Markets Authority (CMA).

“A future date will be communicated subject to grant of regulatory approval,” a statement issued by the company secretary said.

Irrevocable undertakings

Al-Futtaim has already received irrevocable undertakings to accept the offer from holders of shares representing 50.63 per cent stake in CMC but requires a 75 per cent success rate for the offer to be successful.

 If a 90 per cent mark is achieved, the remainder could be taken up through a compulsory acquisition as per the takeover regulations leading to a delisting.

 “We will give them time for more people to come in and raise enough funds for the takeover and that is the normal way an offer is done,” Kibe said.

The takeover period, according to legal requirements, is two months. However, in case the exercise collapses, the takeover bid becomes null and void.