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CMA orders probe into sale of KenolKobil shares ahead of takeover bid

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French firm Rubis’ planned acquisition of Kenyan oil firm, KenolKobil has run into headwinds after the Capital Markets Authority (CMA) announced it has launched a probe into suspected insider trading.

Rubis had announced on Wednesday that it intended to purchase KenolKobil, which is majority owned by former Cabinet minister, the late Nicholas Biwott. It had valued the company at about Ksh 35 billion.

However, CMA has since announced that it 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 following suspicion of irregular trading of the company’s shares on the Nairobi Securities Exchange (NSE).

“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.

Quoting Refinitiv data, Reuters news agency reports that the volume of trading in KenolKobil’s shares on the NSE jumped to 373.46 million on October 23 from 29.51 million a day earlier.

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 23 shillings each, 53.4 percent above their weighted average closing price over the previous 30 days. That values all of KenolKobil at about 35 billion shillings, according to the French company

KenolKobil shares closed at Ksh 15.85  on Wednesday, after surging 31 percent to a record high of Ksh 21.75.

“It is a pretty decent offer,” Reuters quotes Eric Musau, a research analyst at Standard Investment Bank, as saying.

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.

KenolKobil’s profits increased in 2017 and the company has reduced its debt from Ksh 17.2 billion (US$170 million) in 2014 to almost zero.

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“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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BT Reporter
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