Mobil rallies on NIPCO deal as investors play catch-up

Mobil Oil Nigeria has rallied by more than 34 percent since last Tuesday when it provided more details on the deal in which Nipco Investments Ltd is purchasing a 60 percent stake in the oil marketer.

Mobil Oil Nigeria said the acquisition of 216.357 million ordinary shares by Nipco will be for the consideration of $301 million subject to price adjustments for dividends and other factors.

Mobil closed trading in Lagos at a market capitalisation of N87.2 billion or N241.89 per share last Tuesday, meaning the deal translates to a premium of anywhere between N424 – N638 per share depending on what exchange rate is used (parallel market or interbank).

Analysts say while such a premium typically captures goodwill and other brand value, ExxonMobil has gotten a really good deal, especially in the current market environment.

So how far can Mobil run?

We believe that while there is more upside to close the deal acquisition valuation gap, investors who have not already bought the stock may wish to avoid chasing it here.

The easy money has already have been made on this one.

 

PATRICK ATUANYA