In every acquisition across the world, shareholders are usually the main force as they bear the gain or brunt of this critical organisational decision.
So, the concerns of shareholders are always central to any merger or acquisition, especially, in listed entities.
The recent emergence of Honeywell Group Limited(HGL) as the majority shareholder in FBN Holdings (FBNH) drew controversy from stakeholders of both entities.
Honeywell made the strategic investment in FBN Holdings through its affiliate company, Barbican Capital Limited as it acquired 4.770 billion shares of FBN by its affiliate company. The purchase is in addition to previously disclosed interests by HGL’s affiliates.
While to some, the acquisition is a new dawn for shareholders, others were not too sure what the future would become for shareholders of these two entities in the long run.
Although, for over five decades, the investment holding company has demonstrated astute business acumen and praiseworthy stewardship of its diverse portfolio, which includes interests in the foods, manufacturing, telecommunications, real estate, infrastructure, energy and financial services sectors, the acquisition of a 15.1 per cent majority stake in FBNH through Barbican Capital Limited’s purchase of about 5 billion shares, after HGL’s chairman, Oba Otudeko had stayed on the sidelines from the banking institution’s affairs for over two years, was always going to elicit reactions.
While some analysts suggested that Honeywell Group’s position in the banking institution could disrupt FBNH management or even signifies a negative inclination for investors and stakeholders, some think otherwise.
Impacts of the Acquisition On Share Values
In the wake of the majority shares purchase, FBNH witnessed an extraordinary surge in its market capitalisation. Almost instantaneously, there was an increase of N116.66 billion, propelling the company’s value from N612 billion to an impressive N728.67 billion.
The stock price, too, reacted. Initially priced at N17.05 per share at the time of Barbican Capital Limited’s purchase, it rose to N20.3 by the week’s trading closure. This translates to a staggering 19 per cent increase that left investors and analysts alike in awe.
It was also a moment of triumph for FBNH, marking the highest share price the bank had seen in 2023, and an all-time high since it became a holding company. The excitement among investors only grew as the trading day on July 10 unfolded. By the end of that trading day, the share price had surged further to N22.3, achieving yet another yearly high.
For stakeholders and investors, this surge in market capitalisation and share price, according to market observers, suggested that the journey may just be beginning, as there could be more lucrative opportunities in the offing.
Shareholders’ Perspectives
The acquisition by the investment company, according to analysts, makes it the largest shareholder in FBN with a total stake of 15.1 per cent.
Shareholders who spoke to LEADERSHIP on this development noted that, the Honeywell Group’ additional investment in FBN Holdings Plc will create more value for them by unlocking hidden values in the FirstBank, the commercial banking subsidiary of the company.
On his part, a shareholder, Mr. Tunde Oyediran said: “Honeywell Group increased stake in FBNH will be beneficial to the shareholders. The banking sector’s continuous improved performance will be benefited by Honeywell and spilled down to shareholders.”
He stated that, the shareholders of Honeywell will tend to benefit more in this scheme, saying, with proper positioning and target driven board and management of Honeywell Group, the company has the wherewithal to enhance their performance and give better returns to shareholders.
I expect the shareholders to mandate the board for strong efficiency, he said.
The former general secretary of Independent Shareholders Association of Nigeria (ISAN), Mr. Adebayo Adeleke, stated that, “our market is based on the principle of free market. The market is open to everybody. There is no entry or exit barriers. And there are no limits or ceiling to percentage ownership. Shareholding of public companies is not an exclusive right of anyone. We are all co-owners of the business. We welcome anyone who joins the family of FBNH via shareholding irrespective of the volume or percentage of shareholding.”
He pointed out that, “shareholding is the most democratic institution – each share carries a vote and each share earns the same dividend. So, you vote according to your holding and you earn according to your holding. Everybody benefits according to his/her holding. Shareholders’ expectation generally is that their companies are well managed profitably.”
Similarly, the National coordinator, Independent Shareholders Association of Nigeria(ISAN), Moses Igbrude, said: “Honeywell is a shareholder among other shareholders, their interest should not be different from other shareholders’ interest which is shareholders values, good dividends, price appreciations and any intrinsic value and these values can only come or created through hard work and dedication to duty by all FBN holdings stakeholders and this call for unity of purpose.”
He expects “Honeywell investments should bring in value to the company by putting their resources and expertise into working with others in the Group to move the institution to a greater heights of investors choice.
“My appeal to the big investors is for them to work together, with good understanding and intention of bringing the best out of FBN Holdings Plc for benefits of all stakeholders.”
Earlier, the managing director, HGL, Obafemi Otudeko stated that, “Honeywell Group Limited (HGL) is a dedicated long-term investor committed to investing in great businesses with immense growth potential. Our approach involves working closely with stakeholders with a shared vision to foster the creation and enhancement of value for all.
“We understand that this requires time and patience. Our intention is to follow this approach in respect of our investment in FBN Holdings, an iconic institution which we greatly respect and with which we have a deep and long-term relationship, as customers, investors, and board members.”
Conclusion
According to some observers, the entry of Honeywell Group into the picture certainly signifies a new chapter for FBNH, adding that, the emergence of a strong and experienced player like HGL as the majority shareholder can inject fresh perspectives, innovative strategies, and prudent risk management into the banking outfit’s operations.
With their proven track record in various industries, they believe, such an infusion of expertise could potentially lead to enhanced efficiency, improved customer experiences, and an overall positive impact on the bank’s market performance.
It is, of course, important to acknowledge that with any significant change in ownership and management,
Although, they envisaged there may be challenges and adjustments that need to be navigated, they said this is expected in any significant change in ownership and management, believing, the future hold more positives than the negatives.
With the promise of open communication and a willingness to work together, both Honeywell Group and FBNH, market observers said, can without a doubt forge a mutually beneficial path forward.
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