In a corporate disclosure statement to the Nigerian Exchange (NGX), Ardova Plc (AP) announced that it had reached an agreement to acquire a 100percent equity stake in Enyo Retail and Supply Limited (Enyo).
This follows Ardova’s earlier announcement at the start of the year that it was positioning to purchase Enyo following the conclusion of a due diligence exercise.
By acquiring Enyo, Ardova Plc will become the largest downstream energy company in Nigeria, as it will add Enyo’s 95 existing stations to AP’s existing portfolio of 450 stations nationwide, building up the combined group to a network of 545 stations.
Olumide Adeosun, Chief Executive Officer of Ardova Plc, also highlighted the synergistic benefits of the acquisition, as he stated that “On completion, this acquisition will lead to a stronger downstream energy group that benefits from the increased customer reach and service delivery excellence of both companies, with the combination expected to produce stronger financial results.”
Ardova Plc’s management has, since its 2019 takeover of Forte Oil and subsequent rebranding in 2020, successfully positioned the company to be more competitive in the downstream sector. The company has improved its efficiency, reduced costs of funds, and restructured its balance sheet to create a better runway for profitability.
The recent announcement of the deal to be the sole-distributor of Shell lubricants and significant investments in LPG via construction of the largest LPG storage facility in Nigeria at Apapa and the deployment of LPG skids across its retail network, signal a company on its way through a transformational program of investments outside of conventional white products.
The acquisition of Enyo is a pointer to both AP’s competitors and the investing public of its ambition to become Nigeria’s leading integrated energy company.
AP and Enyo have indicated a commitment to close the transaction in the third quarter (Q3) of 2021, following the satisfaction of agreed closing conditions and receipt of regulatory approval.
To this end, Ardova Plc has appointed Stanbic IBTC Capital Limited and Banwo & Ighodalo appointed as its Financial and Legal Advisers, while Rand Merchant Bank and Herbert Smith Freehills Paris LLP are acting as Financial and Legal Advisers to ERSHL.
In their May 6 commentary, equity research analysts at Lagos-based Vetiva Capital asked investors to BUY the shares of Ardova Plc with the analysts Target Price (TP) for the stock at N24.52, representing a remarkable upside from N15.4 it closed on Tuesday June 15.
“We value Ardova at N24.52 and maintain our BUY rating on the counter. We however note that our revised model does not reflect the intent to acquire Enyo Retail and Supply Limited, as the target company’s financial data is not yet available to the public”, the analysts noted.
Ardova Plc had a good start in the first quarter of 2021 despite the PMS supply challenges that impacted product volumes and topline revenue across the downstream sector. AP in its unaudited results for the three months ended March 31 delivered significant improvement in margins and continued its steady track towards core asset optimisation and improved operational efficiency.
(BusinessDay)
