Billionaire businessman Femi Otedola has disclosed that he made an unsuccessful bid to acquire Transcorp Plc for N250 billion and take the company’s market capitalisation to N2 trillion. Although Otedola later acquired a 5.52 percent stake in Transcorp to become the second-largest shareholder, he eventually sold his entire holding to Tony Elumelu, the Chairman of the group.
Otedola has now opened up about the events surrounding his failed bid to take over the company. He discussed his relationship with Elumelu and his plans for Transcorp before he opted out because his bid was rejected. In 2005, while Tony was the Managing Director of Standard Trust Bank, he approached Otedola to get funds to acquire UBA. Otedola gave him $20 million, which was N2 billion at that time to buy the necessary shares in UBA for the acquisition.
After a short period, the share price moved up, and Otedola decided it was a good moment to sell and get out of the bank. However, Elumelu appealed to him to hold on to the shares as he was convinced that there were future prospects – so he kept the shares. Otedola became Chairman of Transcorp Hotel in 2007 with a shareholding of 5%, and Elumelu gradually started buying shares quietly.
By the following year, Otedola went bankrupt in Nigeria, and Elumelu took his shares in UBA to service the interest on his loans, and he also took over his shares in Africa Finance Corporation, where he was the largest shareholder. Shortly after, an American firm informed Otedola that they wanted to acquire his shares in Transcorp, which he agreed to sell. However, this supposed American firm turned out to be Tony Elumelu. The revelation of this prompted Otedola to resign as Chairman of the hotel.
In 2012, Elumelu said he wanted to see Otedola, and they met in his office where he had previously had a meeting with foreign investors who had not yet departed the premises. Curious to know, Elumelu asked what sort of meeting he had had, and he disclosed that he wanted to go into the power business, specifically Ughelli Power Plant. Elumelu quietly went ahead to bid for Ughelli and outbid him by offering to buy the plant for $300 million.
Fast forward to the present, Otedola offered to buy Transcorp Plc for N250 billion, but unfortunately, his offer was rejected. His goal was to maximize the company’s potential as a Nigerian conglomerate with a market cap of at least N2 trillion instead of the current N40 billion, but it seems some shareholders have a different vision. However, Otedola believes in healthy competition and market dynamics, and he respects the majority shareholder’s decision to buy him out.
Otedola’s offer was made with the best intentions for Transcorp Plc and its shareholders. He saw an opportunity to unlock the company’s full potential and create value for everyone involved. It’s important for investors to understand that free entry and free exit are crucial to healthy markets. The scramble for shares after his acquisition is a testament to the value that Transcorp Plc can offer, and he hopes the company continues to thrive under new leadership.
Otedola remains committed to the growth and success of Nigerian businesses, and he will always be looking for ways to create value for all stakeholders. He believes that stakeholders are unfortunately always shortchanged by getting stipends while the owners and managers of the business live a jet set lifestyle, which is detrimental to the stakeholders. Otedola thanked everyone for the opportunity to engage in this exciting chapter of Transcorp’s history.