Twists and Turns in Tussle for  FBN Holdco’s Controlling Shares

Like a goose that lays a golden egg, FBN Holdings has grown to be a conglomerate with a brand sought by all and this is why the recent accumulation of the shares of the company by the Honeywell Group Limited has continued to stir the hornet nest with the unending twists and turns in the drama over the multiple transactions, reports Festus Akanbi

Throughout last week, the media was awash with reports on the controversies trailing what has been described as the spectacular comeback bid of Honeywell Group Limited (HGL) to FBN Holding Plc. It was an exercise that began with the discreet share acquisition binge by the Honeywell Group which crystallised on July 7 when the FBNH’s Company Secretary, Adewale L.O Arogundade, confirmed Honeywell Group’s purchase of the 4,770,269,843 shares of the company’s issued share capital of 35,895,292,791. The record trades valued at N87.8 billion were moved from 26 nominees and trustee accounts to Barbican Capital Limited, an affiliate of the Oba Otudeko-owned Honeywell Group. It remained a transaction that has continued to leave the capital market gasping.

It was obvious the impressive transaction, which makes Honeywell the largest single shareholder of FBN Holdco with its 15 per cent stake took other major shareholders of the company by storm with its potential to stoke some conspiratory moves. It was in an attempt to douse the tension that the management of Honeywell Group explained its mission, saying its latest strategic investment in FBN Holdings through its affiliate company, Barbican Capital Limited, was to create value for them.

FBN Holdings: The ‘Beautiful Bride’

Analysts believed the controversy trailing the humongous share purchase was not unexpected given the strategic importance of FBN Holdings, which has become a national treasure because of its sheer size, profitability, and its historical importance.

They explained that how HGL took other major shareholders by surprise was bound to offset plots by other interested parties seeking to control the institution.  For instance, an investment analyst told THISDAY last week that given the fact that the management of HGL has not left anyone in doubt that it was gunning for the control of the company, tempers would naturally rise, saying however that it is normal and that very soon everything will fall into place.

Apart from counterplots from some other major shareholders, there has also been a move by Ecobank Nigeria Limited, a subsidiary of Ecobank Transnational Incorporated (ETI) to stop HGL based on alleged unpaid debts to the bank.

Unfortunately, the nation’s apex regulatory body in the capital market, the Securities and Exchange Commission (SEC) is yet to make a public pronouncement capable of dousing the tension over the HGL’s comeback bid in FBN Holding. 

Although the media quoted the commission as saying it was reviewing the share deal, watchers of the ongoing drama said it was taking the commission too long to make statements which can halt the confusion being created by the avalanche of claims and counterclaims over the deal. 

The commission’s spokesperson, Mrs. Joy Otubor told Thisday that investigations into the share acquisition were still ongoing as of last week.

Odds Favour HGL

However, in an interview with THISDAY, the founder and former President of the Independent Shareholders Association, Chief Sunny Nwosu alleged that both SEC and the Exchange do not have what it takes to wade into a matter like this. He wondered why it has taken the regulators so long to either approve the HGL’s share acquisition or reject it based on verifiable reasons.

According to him, Oba Otudeko is a businessman who had benefitted from FBN Holdings in terms of business relations. 

“Yes, at a point, he was hugely indebted to the FirstBank but he has fully paid back. The bank has also benefitted from the business relationship because banks are created to do business by granting loans which ordinarily go with interest payment. So, I do not see any reason why he cannot buy the shares of a company he desires,” Nwosu said.

This was the same view shared by another shareholder activist, who is also the National Coordinator of the Progressive Shareholders Association of Nigeria, Mr. Boniface Okezie, while reacting to the antagonism of Ecobank to the HGL’s acquisition of the majority shares of FBN Holding, saying there was nothing from a legal point of view stopping Otudeko from investing in any company he wished to.

He said: “Otudeko invested his money where he wanted to invest it. Nobody can dictate to him where or how to invest his money.” 

He also faulted Ecobank for objecting to the purchase of Honeywell Flour, insisting that the company was free to acquire any business entity it desired regardless of any existing conflicts. 

According to him, Ecobank ought to have initiated proceedings to take over Honeywell Flour under receivership stipulations, rather than try to block the sale of the company to Flour Mills. 

Morale Booster

The Managing Director of the Honeywell Group, Mr. Obafemi Otudeko, in a letter addressed to the Chairman, FBN Holdings Plc, outlined the value the Honeywell Group was bringing to the Holdco, outlined its vision and its other investments in other sectors.

In what has been described as a deliberate morale booster, the HGL claimed to have a deep history of over five decades of building, scaling, and investing in some of Nigeria’s most successful businesses. Key milestone investments include GSM telecommunications, through what is widely known today as Airtel Nigeria, Fan Milk Nigeria Plc, and Honeywell Flour Mills Plc, one of Nigeria’s leading food-producing companies, feeding over four million households yearly.

Fortunately for HGL, some of the shareholders’ groups representing millions of the company’s retail investors appeared to be happy with its entry into FBN Holdings, with many of them saying there is nothing to worry about as long as the share transactions followed the normal channel. 

The Controversy

The other part of the current drama was the attempt by Ecobank Nigeria Limited, a subsidiary of Ecobank Transnational Incorporated (ETI), to scuttle HGL’s share acquisition through a letter addressed to FBN Holdings and had advised it against approving or accepting the investment due to an alleged outstanding “humongous indebtedness” by the company and its founder, Dr Oba Otudeko.

Specifically, Ecobank Nigeria alleged that the Honeywell Group and Otudeko were indebted to the bank to the tune of N13,507,052,417.99. It had further alleged that with the investment in FBN Holdings, Honeywell Group, and Otudeko were diverting funds that ought to be for the repayment of the loan.

But in response to Ecobank, the Honeywell Group in the letter titled: “Re: Shares Belonging to Honeywell Group Limited, Honeywell Flour Mills Plc, Anchorage Limited, Siloam Global Services Limited and Dr. Oba Otudeko in FBN Holdings Plc or Any Other Entity,” described the claims by Ecobank as false.

Honeywell, in a letter by its lawyers, Wole Olanipekun & Co, dated July 10, 2023, stressed that neither Dr. Oba Otudeko nor the Honeywell Group was a party to the Supreme Court decision/proceedings.

It maintained that the Supreme Court did not at any time grant or award any claim in favour of Ecobank. The letter also urged the parent company of FirstBank to ignore and decline the request by Ecobank that the Holdco should reject the recent strategic investment in FBN Holdings by way of share purchase.

Analysts said the onus is with the regulatory agencies in the capital market to wade into the controversy in the interest of FBN Holding before the crisis begin to affect the day-to-day activities of the company. The public wants to know whether or not the transaction got the mandatory approval. The time to act is now.