AP, Zenon Petroleum Set to Merge


January 15, 2008/Thisday


There are very strong indications that Zenon Petroleum and Gas Ltd and African Petroleum Plc will soon merge to form the biggest downstream company in Nigeria.


This is coming as the shares of African Petroleum (AP) Plc yesterday emerged the highest priced stock on the floor of the Nigerian Stock Exchange, closing at a record N274.50 per share. This overtook the shares of Nestle, which had been the most priced on the exchange. Nestle closed at N265 per share.


AP’s market capitalisation has also risen dramatically from N36 billion before Mr. Femi Otedola took over the company to N216,522, 260 billion, six months after.



THISDAY was authoritatively informed yesterday that Zenon Petroleum and Gas and African Petroleum Plc are finalising merger plans.



While officials of both companies are keeping sealed lips on the rumoured merger, THISDAY checks revealed that discussions of the merger proposals were finalised and approved at a board meeting last Friday.



Efforts to reach Mr. Femi Otedola, who doubles as Chairman/CEO of AP and President of Zenon, for confirmation were, however, unsuccessful as calls to his mobile line did not go through.



If the merger is consummated, AP may become the biggest oil-marketing company in

Nigeria in terms of turnover. Zenon’s annual turnover currently stands at N340 billion while AP’s projected turnover for this year is put at N260 billion. A possible N600 billion annual turnover will see the company emerge with the highest turnover in Nigeria.


It is, however, not certain which name the new company will adopt. THISDAY learnt last night that it would either be Zenon or African Petroleum.



AP’s shares have consistently experienced full 5 per cent bid almost on a daily basis on the trading floor for the past three months. The company shares have appreciated by well over 600 per cent over the same period.



However, as at May 4th 2007 when Zenon acquired 215, 227, 778 units of AP shares – making up 26 per cent of the total 27.5 per cent of NNPC stake – the market value of the shares stood at N65.85.



It was gathered that Otedola has since increased his personal holdings, which initially stood at 29.3 per cent, to more than 34 per cent, bringing his total share holding in AP to well over 60 per cent, all acquired on the secondary market.



While many ascribe this to the Otedola factor, the scramble for AP shares may not be unconnected with the company’s rumoured intention to pay between N8 and N10 dividend per share the year ending in December 2007. That will represent over 800 per cent increase from the N1 dividend that was paid shareholders last year.



It is also being speculated in the market that the expected merger of Zenon and AP might have fuelled price appreciation.



Some market operators believe that since Otedola acquired AP, it was just a matter of time before a merger was announced.



Since Otedola took over as Chairman/CEO of AP, the market value of AP stock has increased, a development some market analysts have attributed to renewed confidence in the company because of the success of Zenon in its eight years of operation. On taking over AP, he had appointed Mr. Tunde Falasinnu, from Total Nigeria Plc, as COO of the company in what was seen then as a major “coup” in the industry.



Otedola had in July 2007 paid nearly N17 billion to acquire NNPC’s stake in AP. However, controversy had trailed the acquisition as some shareholders went to a Federal High Court in

Kaduna in an attempt to reverse the sale. The case was however dismissed by the court.


Sadiq Petroleum, which was the initial core investor before divesting, also petitioned the House of Representatives which led to a public hearing. At the public hearing, it was revealed by the DG of the Nigerian Stock Exchange, Prof. Ndi Okereke-Onyuike that while Sadiq Petroleum might have been forced to sell its shares for political reasons, it made a significant profit of N4 billion, having acquired the shares for N2 billion and sold them for N6 billion.



Zenon Petroleum and Gas is wholly owned by Femi Otedola and was established eight years ago. It is an indigenous company engaged in marketing and distribution of petroleum products with diesel and kerosene being its area of strength. It currently controls about a major share of the diesel market in Nigeria.

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