Minority shareholders of Seven-Up Bottling Company Plc have railed against the move by the firm’s majority shareholder, Affelka S.A. to acquire the remaining shares of the minority shareholders it does not already own.

Seven-Up announced on Thursday that its board had received an offer from Affelka S.A. (“Affelka”) to acquire the remaining shares of minority shareholders at a cost of ₦112.70 per share for the 171.54 million ordinary shares at ₦0.50 kobo each held by the minority shareholders, which translates to ₦19.33bn ($60 million). The bid price represents 15% premium on the last trade share price of the company on 9th August 2017, the last day prior to the date of the proposal was received from Affelka and 21.8% premium on the trading price as at close of trading on 28th November 2017.

Affelka S.A. is the holding company of the El Khalil family, the founders of the company which currently holds 73.22% of the company’s shares while seeking to acquire the remaining 26.78% shares held by others.

Regulatory filing shows that the majority shareholder (Affelka) has secured regulatory approval to acquire the “outstanding and issued shares of Seven-Up Bottling Company that are not currently owned by Affelka.”

The minority shareholders objected to the move and called on capital market regulators to block the bid.

Founder, Independent Shareholders Association of Nigeria (ISAN), Sir Sunny Nwosu, said the decision by the majority shareholder is an affront to the Nigerian consumers and shareholders who helped build the soft drinks company to its enviable position.

Nwosu called for adequate regulatory framework that protects the interest of Nigerian investors and prevents such move to deny Nigerians opportunity to be part of the national wealth creation.

“I don’t think it is an appropriate thing to do. We have contributed all these years to build this company and now they want to take us out from sharing in the wealth we created. It is a very serious issue,” he said.

President, Association for the Advancement of Rights of Nigerian Shareholders (AARNS), Dr Faruk Umar, said Nigerian capital market regulators should protect minority shareholders’ interest in the transaction.

He added that Nigerian shareholders should look beyond short-term capital gain to the implication of the acquisition, which will turn the company into a fully-owned foreign company.

Shareholder Activist and Co-Founder, Nigeria Shareholders Solidarity Association, Gbadebo Olatokunbo, said the Securities and Exchange Commission (SEC) should conduct a forensic audit of what led to the decline in Seven-Up over the past three years and why the sudden interest of the majority shareholder to buyout the minority shareholders.

“Though the rule of the game at the capital market is “free entry and free exit”, but the rules insisted on equity on all dealings, therefore the Nigerian local investors are saying we want the forensic-audit of 7-UP since 2014, because we are yet to be convinced that the recent takeover notification of 7-UP is not fraudulent. Why the renewed interest of the majority shareholders in a sudden sick company? Why were they now interested in the takeover when the company isn’t growing? How are we sure that they weren’t the brains behind the unexpected bad results?,” Olatokunbo said.

Describing the move as dangerous, Olatokumbo said, that companies that have benefitted from the Nigerian stock market and funds of Nigerian investors to grow their businesses to international reckoning are now using decoy to exit the Nigerian stock market and block Nigerian minority shareholders.

“We hereby call on both the Ministries of Industry and Finance to seriously look into abuses and corruption going on within the private sector and make necessary amendment, while some of the quotation laws and rules of Nigerian Stock Exchange (NSE) should be seriously looked into to safeguard local investors,” Olatokunbo said.

National President, Constance Shareholders’ Association of Nigeria, Shehu Mikail, said the decision came as a surprise, calling for a thorough review of the decision by Seven-Up.

He noted that the bid to buy out the minority shareholders by Affelka is reminiscent of what happened in 2011 when minority shareholders of the Nigerian Bottling Company (NBC), the bottlers of Coca-Cola products in Nigeria lost out to Coca-Cola Hellenic Bottling Company, which acquired the minority shares in a deal at the time said to be worth ₦21bn ($136m) leading to the delisting of the company from the Nigerian Stock Exchange.

“We would not agree on this action and Nigerian shareholders should have a stake in it because Nigeria is a good market and we would not agree, that was what they did with Nigerian Bottling Company (NBC). This action would let Nigerian shareholders know if our regulators are ready to protect the interest of Nigeria shareholders and the economy at large,” Mikail said.

According to the proposal, the acquisition would be carried out through a scheme of arrangement under Section 539 of the Companies and Allied Matters Act (CAMA) and other applicable rules and regulations.

So far, Seven-Up has received the “No Objection” approval of the Securities and Exchange Commission (SEC). However, the scheme is still subject to the approval of the shareholders at a Court-Ordered Meeting as well as the approval of the Federal High Court.

The management of Seven-Up said that the company has been posting losses over the last few years and that the aim is to restructure the company, adding that delisting the firm from the stock exchange after the buyout would be “logical”.

The firm reported a net loss of ₦10.7bn for the full year ended 31 March 2017, and the losses have continued into the first-half of 2017/2018 financial year, recording ₦6.2bn ($17 million) in loss.

Seven-Up Bottling is the sole producer and marketer of Pepsi Cola products in Nigeria including 7Up, Pepsi, Mirinda, Aquafina bottled water and others. The firm was incorporated in Nigeria in 1959 and became a publicly traded company in 1978.