In a significant move, the Dangote Group has made public its intention to merge three of its prominent subsidiaries—Dangote Sugar Refinery (DSR), NASCON Allied Industries Plc (NASCON), and Dangote Rice Limited (DRL).
This merger, as announced in a press release by the Company Secretary Mrs. Temitope Hassan, will be executed via a scheme of consideration.
Details of the Merger
The merger outlines specific conditions under which it will proceed, which are as follows:
- For every twelve (12) NASCON shares of 50 Kobo each, eleven (11) ordinary shares of 50 Kobo each in Dangote Sugar Refinery will be issued. This translates to the issuance of 2,428,651,847 new ordinary shares of DSR.
- For every one (1) ordinary share of N1.00 Kobo each in Dangote Rice Limited (DRL), fourteen (14) ordinary shares of 50 Kobo each in Dangote Sugar Refinery will be issued. This leads to the creation of 2,775,792,508 new ordinary shares of DSR.
Impact on Shareholders
The implications of this merger for shareholders are best understood using a simple mathematical formula widely employed by investors for calculations. The formula, which is C/B multiplied by A, allows investors to determine the shares they will receive after the merger based on their current holdings.
NASCON Shareholders
For every 12 NASCON shares, shareholders will obtain 11 ordinary shares of Dangote Sugar Refinery. For instance:
- If you currently hold 100 NASCON shares, you will receive approximately 92 shares in Dangote Sugar Refinery, thereby becoming a shareholder in DSR.
- If you hold 200 NASCON shares, you will receive around 183 shares in DSR. Similarly, a random number like 443 NASCON shares will translate to approximately 406 units in DSR.
- Ultimately, NASCON will cease to exist as a standalone company, and its shareholders will transition into Dangote Sugar Refinery shareholders.
Dangote Rice Limited (DRL) Shareholders
For each DRL share owned, 14 ordinary shares in Dangote Sugar Refinery will be allotted. For example:
- If you currently possess 100 DRL shares, you will receive about 1,400 shares in Dangote Sugar Refinery, establishing you as a DSR shareholder.
- With 250 DRL shares, you will obtain roughly 3,500 shares in DSR. Similarly, holding a variable like 670 DRL shares will result in approximately 9,380 units in DSR.
- Following the merger, DRL will be dissolved as a distinct entity, and its shareholders will become part of Dangote Sugar Refinery.
Dangote Sugar Refinery
The merger’s press release indicates that Dangote Sugar Refinery’s shareholders will experience a dilution due to the issuance of new ordinary shares—2,428,651,847 for NASCON and 2,775,792,508 for DRL.
This combined dilution will amount to 5,204,444,355 shares of DSR, constituting a 42.8% increase in the current outstanding shares of the company.
Although this dilution is anticipated, the market value of Dangote Sugar Refinery is expected to rise, underscoring the potential positive impact of the merger on the company’s valuation.
Predictions for the Future
As the merger progresses, experts anticipate a consolidation of resources and a streamlining of operations, which could lead to increased efficiency and competitiveness within the merged entity.
The market response to the announcement suggests that investors are optimistic about the future prospects of the newly formed conglomerate.
Furthermore, the projected expansion of Dangote Sugar Refinery’s shares is likely to contribute to the company’s enhanced presence and influence in the market.
