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Sunday, July 3, 2022

Chemical and Allied Products, Portland Paints Propose N2.3bn Merger

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The Boards of Directors of Chemical and Allied Products PLC (CAP) and Portland Paints and
Products Nigeria Plc have taken a decision to merge their respective businesses in accordance with applicable laws; with CAP emerging as the resultant entity.

The Scheme will involve the transfer of all Portland Paints’ assets, liabilities and
business undertakings including real property and intellectual property rights to CAP.

In consideration for the transfer, CAP is offering shareholders of Portland Paints a choice to receive N2.90 cash for every Portland Paint share held (for a total consideration of N2.3 billion) or 1 new ordinary share of CAP credited as fully paid up for every 8 Portland paints shares held.

The Proposed Merger is subject to the required regulatory and corporate approvals being obtained. The respective Boards of CAP and Portland Paints strongly believe that the Proposed Merger, which provides a unique opportunity to change the Nigerian paints and coatings landscape, will be attractive and value accretive to shareholders of both companies.

The decision to pursue the Proposed Merger is driven by the strategic objectives of the Boards of CAP and Portland Paints to drive growth and expansion within the Nigerian and African markets.

CAP and Portland Paints play in distinct segments, and the enlarged CAP will have
a broader portfolio covering the top-end/premium decorative segment, the mid-market
decorative segments as well as the industrial segment (in particular marine and protective
coatings).

The combination of CAP and Portland Paints will create a formidable paints and coatings
company that will be strategically positioned across segments as a result of its combined
brand portfolio (Dulux, Sandtex, Caplux and Hempel); its diversified product ranges spanning decorative and industrial with widespread distribution channels and retail footprint in Nigeria.

Subject to receipt of the relevant regulatory and corporate approvals, the Proposed Merger
will be executed by way of a Scheme of Merger (the “Scheme”) in accordance with Section
711 of the Companies and Allied Matters Act, 2020 and other applicable laws, rules and
regulations.

The proposed consideration represents a 45 percent premium to the last traded share price of Portland Paints on October 16, 2020, being the last business day prior to the date on which CAP sent its merger proposal to the Board of Portland Paints and a 41 percent premium on the trading price as at close of trading on October 23, 2020.

Completion of the Proposed Merger is subject to approvals from the Federal Competition
and Consumer Protection Commission, the Securities and Exchange Commission, The
Nigerian Stock Exchange as well as shareholders of CAP and Portland Paints, respectively.

The Proposed Merger is also subject to the sanction of the Federal High Court.
Commenting on the Proposed Merger, David Wright, Managing Director of CAP, said: “The
decision to pursue the Proposed Merger, is driven by the Board’s strategic plan to aggressively grow within the Nigerian and African markets. We believe that the Proposed Merger presents a unique opportunity that will benefit all stakeholders, from shareholders to customers as well as the broader economy.

I am excited by the prospect of an enlarged company with a broader decorative paint portfolio covering the premium, mid-market and affordable segments and the inclusion of marine and protective coatings, all of which will benefit our customers and shareholders.”

Bolarin Okunowo, Managing Director of Portland Paints, said: “In recent months, the Board
and management of Portland Paints have evaluated various strategic options with a view to
positioning our company to capture emerging growth opportunities. CAP’s business is
complementary to ours, and both companies will be better able to serve our respective
customers by coming together. I believe the combination of Portland Paints and CAP will
yield significant benefits for all of our stakeholders.”

Shareholders are advised to exercise caution when dealing in the securities of CAP and
Portland Paints until requisite approvals are obtained.

Portland Paints is a public company listed on The Nigerian Stock Exchange. UAC of Nigeria
PLC owns 85.98 percent of the company’s issued share capital. CAP is a public company listed on The Nigerian Stock Exchange. It is a subsidiary of UAC of Nigeria PLC which holds 51.49 percent of the company’s shares.

CAP Plc recently announced a 24 percent drop in nine months Profits.

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