BY ZAKA KHALIQ, Lagos
Shareholders of Law Union and Rock Insurance Plc have accepted an offer of N1.23 per share for every 50 kobo ordinary share they held from the new owner-Verod Capital Management.
The board secured the exit payment from its new investor in the quest to get full value for the investment of shareholders of the company.
Basically, the offer was secured from Verod Capital to purchase the entire issued share capital of the insurer to which it signed a Transaction Implementation Agreement (TIA) with Verod, through its investment vehicle, Kanuri LUR limited, that sets out the broad framework for the acquisition of the entire issued capital of the underwriting firm by Kanuri LUR.
The agreement for the exit payment was reached by the board and shareholders of Law Union and Rock Insurance at its 51st annual general meeting court ordered meeting held in Lagos, at the weekend, where the Scheme of Arrangement for the proposed acquisition of the company was discussed.
The development is due to the mandatory regulation by the National Insurance Commission (NAICOM), increasing the minimum paid up share capital of all insurance and reinsurance companies, hence, the minimum paid up capital of the firm was increased from N3 billion to N10 billion.
However, the proposed transaction as contained in the TIA is expected to involve the transfer of a total of 4,296,330,500 ordinary shares of 50 kobo each of law Union held by shareholders to Kanuri LUR or any other nominee of Kanuri LUR in consideration for a cash payment of N1.23 per share to the scheme shareholders, following which all the shares will become fully held by Kanuri LUR and its designated nominee.
Subsequently and upon the scheme becoming effective, Law Union is expected to be delisted from the main board of the Nigerian Stock Exchange(NSE), the registration of the ordinary shares of the insurer with the Securities and Exchange Commission (SEC) will be withdrawn and the company will be re-registered as a private company limited by shares.
Chairman, Law Union and Rock Insurance, Mr Remi Babalola during the meeting, stated that the company initially explored merger discussions with other insurance companies and communicated initial recapitalisation plan to NAICOM.
He however noted that they found that the shareholders of Law Union would not maximise shareholder value if such merger discussions crystallised, which led them to seek more optimal avenues for shareholders to get better value for their investments in the company, through acquisition by Verod, using the Kanuri LUR SPV.
The managing director, Law Union, Mr. Ademayowa Adeduro, on his part, said historically, the firm has performed excellently especially since its acquisition by the consortium of investors (Alternative Capital Partners and Swanlux Solutions and Services Limited in 2012), who embarked on a transformation and restructuring process that has enabled the company align its offerings to the unique needs of the various sectors of the economy.