Dubai’s Al Futtaim extends offer period for CMC takeover

CMC’s showroom in Nairobi. The Dubai firm has given CMC shareholders more time to accept its offer. FILE 

By VICTOR JUMA,

In Summary

• Al Futtaim extends offer period beyond the closing date of January 24.
• Top CMC owners face a Sh300 million penalty for breach of a takeover pact agreed with the Dubai firm.
• The buyout offer opened on December 6 and Al Futtaim needs support of shareholders controlling at least 75 per of CMC for the deal to go through.

• Dubai’s Al Futtaim extends offer period for CMC takeover

A Dubai-based firm seeking to buy CMC has indefinitely extended the period that the auto dealer’s shareholders can accept its offer for fear of an undersubscription.

Al Futtaim on Tuesday extended the offer period beyond the closing date of January 24 as it emerged that top CMC owners face a Sh300 million penalty for breach of a takeover pact agreed with the Dubai firm.

It did not offer fresh dates for the closure of the offer, prompting the postponement of an extraordinary general meeting that was set for tomorrow to approve the takeover deal.

“Al Futtaim has extended the offer period to avoid the risk of below—target commitments by the initial closure of January 24,” said a person with knowledge of the deal.

He added that the offer was initially set to open in October, but was delayed to December on late regulatory approvals and issuance of the formal bid document to CMC’s 14,743 shareholders.

The December holidays further cut business days during which sale commitments could be received and processed. The buyout offer opened on December 6 and Al Futtaim needs support of shareholders controlling at least 75 per of CMC for the deal to go through.

Shareholders controlling 50.6 per cent or 295 million CMC shares have agreed to support the takeover and to pay Dubai’s Al Futtaim Sh1 per share if they breach buyout conditions.

This means that the Dubai firm needs to secure a 24.4 per cent stake from retail investors to top up the 50.6 per cent already pledged by the major owners.

Break fee

The CMC top owners include Peter Muthoka with a 24.7 per cent stake, Jeremiah Kiereini (12.5 per cent) and former Attorney-General, Charles Njonjo (1.32 per cent).

Others are the dealer’s chairman, Joel Kibe and Paul Ndung’u who directly own a 4.05 per cent stake and 7.4 per cent respectively.

The penalty is contained in a takeover offer document offered to CMC shareholders by Al Futtaim Group which is seeking to buy entire stocks of CMC for Sh7.5 billion or a share at Sh13.

The fine is seen as a hedge against wild factors such as a rival buyout bid that could lure CMC’s major and retail investors with a higher price.

READ: Dubai Al-Futtaim Group bids Sh7.5bn for CMC Holdings

The major investors have undertaken to support Al Futtaim’s acquisition bid, failure to which they have agreed to pay a “break fee” of Sh1 per share to Al Futtaim.