• Tuesday, June 18, 2024
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CAP Plc to control 25% of paint industry market share after merger

CAP Plc to control 25% of paint industry market share after merger

CAP Plc, one of Nigeria’s leading paints and decorative companies, would be controlling 25 percent market share of the Nigerian paint industry over the next three to five years, according to David Wright, managing director.

The company emerged from the merger of two subsidiaries of UAC Plc -Chemical and Allied Products (CAP) Plc and Portland Paints and Products Nigeria Plc.

The value of the entire market is put at about 250 to $300 million. CAP has about 11 to 12 per cent market share and Portland was number four in the market with about three per cent market.

He was of the view that the paint industry in Nigeria was not massive owing to the fact that the larger number of the players in the industry were operating informally.

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Within the market, Wright said there are only a handful of what you would consider to be substantial businesses. These are hundreds if not thousands of small people who make paints in their small backyards.

“But when you talk of people like ourselves who are fully incorporated, have a proper factory, have proper quality systems in everything, there are probably only 10 companies. Within a group of 10 companies, turnover-wise, CAP is the largest in terms of volume,” he said.

Wright told journalists recently that the two companies wanted to create a single company that would be formidable and dominant in the market.

The transaction for the merger of both companies had been in the works for more than one year. “Executing the merger will give rise to Nigeria’s biggest paint and chemical company by market capitalisation,” he said.

“So, when you bring the two together, we have 15 per cent market share as of when the merger was first put into place, and that makes us clear leaders in terms of turnover, and our aim is really to push that up. I would like to say, we will get up to 25 per cent market share within the next three to five years, Wright said.

One of the reasons for the merger was to grow the business aggressively both organically and via acquisition.

The deal he believed would position the business to leverage the combined market shares and influence of the firms in delivering better shareholder’s value while pooling their assets together in this regard.

Early this year, specifically in January 2021, the company noted that the proposed merger presented a compelling opportunity to create significant value for shareholders of CAP and achieve the company’s strategic growth objectives as a larger company with a broader product portfolio, more corporate-owned brands and diversified revenues.

Wright explained that the merger had progressed significantly and a lot of the operations of the two companies had already come together.

“The logic that UAC had two paint companies seemed to be strange. So, the first obvious thing is to bring those two paint companies together, which was when we announced that we were looking to merge the two businesses.”