In it’s heyday, KenolKobil was among the bellwethers of the Nairobi Securities Exchange (NSE).
It routinely brought oil products into Kenya on behalf of other marketers after winning the monthly Open Tender System. It expanded steadily across Eastern Africa, a seal to the war chest it had.
These last two, more than any tangible evidence, backed the company’s strong association with the former powerful Cabinet minister of President Daniel Moi’s reign, Mr Nicholas Biwott.
Just as his death in July robbed Kenya of one of its most fabled power brokers, so will be the pending exit from NSE of a blue chip which is being taken over by French oil firm Rubis Énergie.
To benefit from the deal, which values KenolKobil at Sh35.7 billion, will be heirs of the Biwott estate who — through Wells Petroleum Holdings Ltd — on Tuesday agreed to sell their 24.99 per cent shareholding in the company to Rubis for Sh5.6 billion in order to lay the ground for a takeover.
“The family (Biwott’s) is the one that sold the block of shares on Tuesday, and it is widely believed that they have additional interest in the company,” said a source aware of the sale who asked not to be named in order to comment on the issue freely.
And that is not all. They will make another Sh2.8 billion once the takeover bid announced by Rubis sails through as expected. This is because Wells Petroleum Holdings sold its block stake at Sh15.30 per share, giving Rubis the platform from which to buy out other shareholders in KenolKobil. Rubis will pay Sh23 per share for the remaining shareholding, a premium that will be extended to Wells Petroleum Holdings.
“Rubis Énergie agreed that … on the successful conclusion of such a takeover offer, it will pay to Wells an amount equal to the difference between the offer price per share ultimately paid by Rubis Énergie to other shareholders of KenolKobil pursuant to the offer and the market price paid to Wells for every share that purchased from Wells pursuant to the block trade,” said Rubis in a notice issued Wednesday.
The transaction could, however, face some headwinds after the Capital Markets Authority ordered a freeze on the accounts of some investors after it “identified potentially irregular” trading of the KenolKobil counter in the run-up to the Rubis notice. This is usually a sign of some traders having privy knowledge of an impending transaction or what is technically called insider knowledge. The KenolKobil share price rose by 29 per cent to close the day at Sh19.80 on news of the offer, valuing the firm at Sh29.1 billion.
Mr Biwott’s exact shareholding in KenolKobil remains unclear since it is held largely in corporate and nominee entities. Capital market insiders, however, linked Wells Petroleum, the biggest institutional investor in KenolKobil, to the family.
Unlike in most cases where estates crumble once the founders exit the scene, insiders said the divestiture represents a prudent move for the family given the premium on offer — more than half above yesterday’s trading price of Sh15.30 at the NSE. Significantly, it comes at a time when Biwott’s will is being executed. This suggests the heirs may have decided to liquidate the crown jewel and split the proceeds.
Capital market rules allow an investor who gets 24.99 per cent of a listed company to launch a takeover bid. Rubis is itself listed on France’s Euronext Paris stock exchange.
This is the second takeover bid for Kenol in this decade. In 2013, its top owners failed in a bid to sell their holding to Switzerland-based Puma Energy after the buyer pulled out of the deal for undisclosed reasons.
KenolKobil was for a long time recognised as Mr Biwott’s flagship investment in Kenya — and the most visible — having acquired a stake in it in the early 1980s.
It made sales of Sh90 billion in the six months ended June 2018, which translated to a net profit of Sh1.7 billion.
The firm has been listed on the NSE since 1959, making it one of the oldest publicly traded companies in Kenya. It will be delisted from the NSE if the takeover is successful, Rubis announced Wednesday.
The takeover has high chances of success given that Rubis must have lobbied the cooperation of other shareholders besides Wells Petroleum. The top 10 shareholders in KenolKobil hold 64.4 per cent of the company, as per the latest available filings dated February 201, 2018. Nine of these are either institutional investors or nominee accounts, whose individual beneficiary owners are unknown.
Tanzanian billionaires Aunali and Sajjad Rajabali are the only individuals named on the top shareholders list, jointly holding a 5.22 per cent stake in the firm that, after the sale, will net them Sh1.8 billion.
Petro Holdings Ltd, with a 12.9 percent stake equivalent to 190 million shares, stands to net Sh4.4 billion under the takeover terms offered by Rubis.
Rubis expects to complete the takeover early next year, its chief financial officer Bruno Krief said yesterday, pending approval from various regulators including CMA, the Competition Authority of Kenya and the Energy Regulatory Commission.