Nigerian billionaire Femi Otedola sells his Transcorp stake to Tony Elumelu

Nigerian billionaire Femi Otedola sold his Transcorp stake to Tony Elumelu

Two weeks after news first surface about his acquisition of a large minority stake, African Custodian Magazine can authoritatively confirm that Nigerian billionaire Femi Otedola has sold off his entire shares in Transcorp Plc to Tony Elumelu, the company’s chairman and largest shareholder, putting an end to an intriguing corporate drama that has shocked, rocked, and rolled Nigeria’s capital markets over the past several days.   

According to sources who spoke to African Custodian Magazine, the transaction was a negotiated deal between Otedola and Elumelu, which was brokered by prominent, mutual friends of the two tycoons.

A privileged, yet unconfirmed source who enjoys proximity to the two billionaires – and who requested anonymity, claims that Elumelu paid Otedola an 400-percent premium on Transcorp’s closing price on Thursday to acquire his bloc of shares.

This would mean that Otedola, who owned 2.6 billion shares or 6.3 percent of the company, was paid somewhere in the neighbourhood of NGN 12.5 ($0.027) per share, and walked away with a N32.5 billion ($70 million) payout.

Neither Transcorp nor Calvados Global, Otedola’s investment vehicle, responded to Billionaires.Africa’s request to comment on this story.

On April 12, Billionaires.Africa reported that Otedola, the chairman of Geregu Power, had acquired a 5.52-percent stake in Transcorp, making him the second largest shareholder of the company.

The transaction was consummated between an entity owned by Otedola and AMCON.

Days later, Otedola acquired additional shares, upping his interest in the conglomerate to 6.3 percent.

The acquisition suggested that the billionaire investor was likely to set the stage for a bidding war for control of one of Nigeria’s indigenous and most recognized conglomerates.

The news sent shock waves across the stock market and spurred interest in the Transcorp’s shares at the Nigerian Exchange (NGX) Limited, resulting in a 128-percent boost in its stock price over the past two weeks.

Sources close to Otedola confirmed that the chairman of Geregu Power was keen on wrestling control of Transcorp from Elumelu, and was eyeing its lucrative power assets.

While Otedola’s publicly-traded Geregu Power has one power plant in Kogi State with an installed capacity of 435 MW – and boasts a market cap of more than $1.6 billion, Transcorp has two power plants in Delta and Rivers states with combined capacity of over 2,000 MW, but its market cap sits at less than $300 million.

Analysts had for long maintained that Transcorp was significantly undervalued.

Otedola purchased the under-performing State-owned power asset in 2013, with an effective capacity of less than 100 megawatts (MW), and increased its capacity to 435 MW, with 70-80 percent of power generated being supplied into the grid.

Geregu Power, whose shares have doubled in just six months, recently paid out N20 billion ($43.5 million) in dividends to its shareholders for the 2022 fiscal year.

Transcorp’s stock on the other hand, had perpetually languished at the neighborhood of N1 ($0.003)  per share for years, with lacklustre dividends paid over the past few years.

Otedola had already started making demands for board seats on Transcorp’s board, and was still buying shares in the company every day. 

But Elumelu fought back.

Within a space of days, Elumelu acquired an additional 9.7 billion shares in separate deals to ramp up his combined stake in the group to 10.5 billion shares or 25.9 per cent, cementing his position as Transcorp’s main shareholder.

While Elumelu painted a rosy picture on Nigerian media of a chummy relationship with Otedola when news of the latter’s acquisition went mainstream, insiders who spoke to Billionaires.Africa confirm that the relationship with the two billionaires had become tense in the last few weeks.

“Initially, Elumelu had been calling Otedola to reach a resolution, but Otedola, who has been in New York, was not even picking up Elumelu’s phone calls,” a source said.

Elumelu is said to have quickly called on their mutual friends to help broker a deal with Otedola. On his own part, Elumelu granted an interview to ARISE, a prominent Nigerian television station, where he spoke in glowing terms of his multi-decade-long friendship with Otedola, and said he welcomed Otedola’s investment in the firm. Behind the scenes, mutual friends of the two prominent business giants were putting pressure on Otedola to make a deal with Elumelu.

Femi Otedola, who is worth over $1.7 billion by Billionaires.Africa’s estimates, has a well-documented history of waging fierce corporate battles. In 2009, he went toe to toe with Aliko Dangote, when the latter broke a gentleman’s agreement and decided to step into Otedola’s oil patch. At the time, a consortium that included an oil company linked to Dangote outbid Otedola’s company to acquire Chevron’s West Africa downstream operations. Both men had promised not to venture into the other’s line of business. In retaliation, Otedola started acquiring large chunks of shares in Dangote’s public companies. He also sponsored ads in several mainstream Nigerian newspapers accusing companies owned by Aliko Dangote and Dangote’s stockbrokers of manipulating the share prices of African Petroleum, Otedola’s company at the time. The feud was eventually settled by Nigerian government officials.

Otedola has also had public corporate spats with insurance tycoon hassan Odukale over control of FBN Holding, a leading financial services firm where he is now the top shareholder, as well as another with Wale Tinubu, Oando’s head honcho. Uninterested in experiencing a war with Otedola, Elumelu chose the path of least resistance.