No more Seven-Up for investors as bottler delists from Exchange

After 33 years as a listed company on the Nigerian Stock Exchange (NSE), Seven-Up announced yesterday that it is delisting from the Exchange. This will deprive investors the opportunity of holding the shares of one of best performing companies on the exchange before it ran into troubles water in 2016.

The Exchange approved the voluntary delisting of Seven-Up Bottling Co after it received a takeover bid from its majority shareholder aimed at restructuring the soft drinks bottler.

The stock exchange, which suspended trading in the company’s shares in January, said in a notice that it approved the delisting last week.

In January, Seven-Up’s minority shareholders backed a $70 million buyout bid by majority investor Affelka, the investment firm of the Lebanese El-Khalil family, Reuters reports.

The bottler received the takeover proposal last August after posting losses, in a deal aimed at restructuring the 7-Up, Pepsi and Mirinda distributor.

In explaining the reason for financially restructuring the company, the company’s board had noted that the financial performance of the Company over the last couple of years has been predominantly negative, as a result of the myriad of challenges imposed by the unfavourable macro-economic environment; such as, sharp currency devaluation resulting in a massive escalation in the cost of raw materials, distribution, and other operating costs including overheads, high debt servicing costs due to increases in interest rates and borrowing expenses.

‘This is further exacerbated by the extremely competitive environment from existing and new privately owned entrants, flooding the market with cheaper products which makes SBC unable to pass on the increased costs to the end consumer.’

The Board had also explained that it ‘believes  that the operating dynamics of the Company are unlikely to improve in the foreseeable future and that, in the absence of a comprehensive corporate and financial restructuring, the Company’s shareholder book value of equity, which lost 47% year-on-year in 2017, will be further eroded by the continued losses.’

The board had initially offered minority shareholders N112 per share to buy out their stakes in the company but later raised the offer to N125 per share. With the offer complete, Seven Up now becomes a wholly owned subsidiary of Affelka. Affelka and Sparkplexi are the remaining shareholders of Seven Up, with Affelka owning 73.22 percent and Sparkplexi owning 26.78 percent.

AFFELKA S.A. (the “Company”) is a joint stock corporation registered on 3rd May 1982 pursuant to the provisions of the General Corporation Law of the Republic of Panama, to wit Law 32 of 1927. The Company is effectively owned equally by three beneficial shareholders; Anwar El Khalil, Farid El Khalil and Faysal El Khalil through Bermuda based MAK Holdings Limited. The Company has held a controlling majority interest in Seven-Up Bottling Company PLC (“Seven-Up”) since the former’s inception in 1982.

The soft drinks bottling industry has been hit by slow demand arising from weak economic growth in Nigeria, which recently emerged from a recession and a currency crisis that stifled raw material imports.

The Seven-Up Bottling takeover comes six years after its main rival Coca-Cola delisted its local bottling unit in a $136 million buyout deal to expand the business and fend off competition.