April 07, 2011, Biodun JESSE
Friday's all-party's meeting at The Nigerian Stock Exchange to resolve complications arising from what has been reported as a takeover bid at Transcorp by Heirs Holdings is a weak attempt at an official cover-up of regulatory failure.
What would the meeting achieve? Make legitimate a deal that was fraught with irregularities? Cancel a transaction that The Exchange has already said was good?
It is no good at this stage dwelling on the value that Heirs Holdings will bring to Transcorp. The issue that should occupy attention for now is the means by which the investor seeks to access the company. The end cannot justify the means.
For starters - for believability - The Exchange must clear itself of complicity in this debacle of a deal. It was either that The Exchange connived in the deal or it could not tell a bad deal from a good deal, as a regulator.
Thus, in addition to the issues that have already been raised on this transaction, it would be necessary to ask the following questions:
1. What was the purpose of BGL writing The Exchange ahead of the transaction? Was it merely for The Exchange's information or for The Exchange's approval of the transaction? If it is for approval, did BGL get the approval before executing the trade(s)? Why is BGL not sanctioned for bringing the market to disrepute by its conduct?
2. If BGL's letter to The Exchange was merely for information, what did The Exchange do with the information? Filed it away? Is that what an exchange does with such material information? No questions were asked?
3. If The Exchange considered BGL's letter and thought the proposed deal was good, should The Exchange not have informed the market of this development? Should the issuer (Transcorp) and other market participants be guessing about such unprecedented activity in the shares of the company?
4. What is The Exchange's obligation to listed companies and other market participants?
Those who know about the market mechanism would list prompt transmission of relevant information to the market among the duties of The Exchange to the market. Now, how does this contrast with the matter under consideration? Rather than offer certainty, The Exchange by its laidback response to this transaction has brought suspense to the market. Between NSE's Press Release and the meeting of Friday, what were investors expected to do? Of course, they can only speculate.
Looking at some of the reactions so far to the said takeover bid, it seems we have left the substance to celebrate the ephemeral. There has been a blatant breach of the market processes and some of us are hankering about values that would come with the new investor. Where will this value come from? Can you give what you do not have? To think that this is happening at a time we have adopted transparency and regulation as our mantra!
One hopes that this is not another case of confused regulatory action that has left Nigerian Bottling Company in a suspended state of animation as a quoted company.