Custodian Investment Plc and UAC of Nigeria Plc have signed a binding agreement for Custodian to purchase a 51 percent equity interest in UACN Property Development Company (UPDC) Plc.
This was disclosed in a statement issued by both companies on the Nigeria Stock Exchange (NSE) on Monday.
“This agreement marks the beginning of a partnership between Custodian and UAC that will achieve both companies’ respective objectives in the real estate industry,” the statement read.
It disclosed that a total of 9,465,584,668 UPDC ordinary shares (“sale shares”) held by UAC, representing 51 percent of UPDC’s issued share capital, would be sold to Custodian.
The statement added that the sale shares will be sold in two tranches: Initial sale of 946,558,467 shares, representing 5.10 percent of the issued share capital of UPDC, on execution of binding transaction agreements, and subsequent sale of 8,519,026,201 shares, representing 45.90 percent of the issued share capital of UPDC upon receipt of requisite approvals.
“Completion of the sale is subject to regulatory approvals from The Nigerian Stock Exchange (NSE) and the Federal Competition and Consumer Protection Commission (FCCPC),” it read.
Commenting on the partnership, Wole Oshin, group managing director of Custodian, said the company was looking forward to the opportunities for growth that would be created from the partnership.
“We at Custodian are excited about the possibilities arising from this partnership with UAC which provides multiple levers for value creation,” he said.
“The rationale for the transaction is that Custodian and UAC share the view that their ambitions for capturing opportunity in the real estate industry will be better achieved working in partnership,” Oshin added.
Folasope Aiyesimoju, group managing director of UAC, explained that the journey to the recent development began in 2018, adding that “the transaction is a significant step in achieving our objectives for UPDC.”
“In 2018, the board and management of UAC embarked on a strategic review to evaluate the performance of the company and its subsidiaries,” she said.
“In September 2019, the boards of directors of UAC and UPDC jointly announced three significant strategic initiatives aimed at strengthening UPDC and positioning the company to operate as a standalone entity.
“In the process of progressing the unbundling initiatives, UAC received a credible offer from Custodian.
“The terms of the offer compelled the board to re-evaluate the planned approach to deconsolidate UPDC and influenced the board’s decision to proceed with the sale of a portion of UAC’s interest in UPDC to Custodian, effectively putting an end to the UPDC unbundling.”