4 March 2008
Lagos — Managers of Sovereign Trust Insurance Plc have confirmed their moves at sealing an acquisition deal with ACEN Insurance Plc.
Managing director of Sovereign Trust Insurance Mr. wale Onaolapo when confirmed the moves in Lagos said however that it may take a little longer time to conclude considering the need to protect the interest of all stakeholders.
Mr. Onaolapo had revealed that it took the new leadership at the National Insurance commission (NAICOM) for Sovereign Trust to renew interest in the acquisition of ACEN.
It would be recalled that Champion Insurance had early last month reported that the authorities at the NAICOM may have moved in to prevent ACEN Insurance Plc from going under as the commission prevails on Sovereign Trust Insurance Plc to acquire the company.
According to the story then, the Mr. Fola Daniel led NAICOM had demanded that Sovereign Trust reopens its bid to merge with ACEN in a manner that will see the later remaining afloat.
Although the move cajoling STI to partner with ACEN was coming one year after the February 2007 deadline allowed insurance companies to recapitalize their operations or risk liquidation, NAICOM was said to have insisted that an earlier scheme of merger entered into by STI and ACEN Insurance serves as enough platform for the sustenance of the ACEN brand.
It would be recalled that ACEN was one of the insurance companies which recapitalization status could not be ascertained at the close of the exercise.
Consequently, the insurance commission was said to have found it difficult including the company on the list of the 49 firms which it recently presented as complying with the recapitalization requirements.
Respite came the way of ACEN when yet again its name was found missing in the range of the seven companies which NAICOM shot down mid January.
It can now be revealed that the company may soon resurface, this time, as a member of the growing family of Sovereign Trust Insurance Plc, a group which presently boasts of the fusion of no fewer than four insurance companies.
Yet, Mr. Onaolapo had told newsmen in Lagos recently that the proposed marriage between ACEN and Sovereign Trust will go the way of acquisition as opposed to the initial plan of a merger.
But investigations showed that the status of both STI and ACEN as quoted companies may slow the pace as indications emerged last week that STI may not be willing to jump at the offer without making recourse to its shareholders by way of extra ordinary general meeting.
Beside, it was gathered last week that there may be the need for a second round of due diligence on ACEN to ascertain its current financial standing.
"You will recall that the first time that this issue of merger came up, the shares of STI were considered at the price of 95 kobo. Now it is at about N5.50k. I am not sure that ACEN is more than the 95 kobo. What this means is that the initial share exchange ration will have to change. There are some other technical issues. So, it may not be as easy as it seems but it can be worked out", a financial analyst was quoted as telling Champion Insurance recently.
The last consolidation exercise had seen STI merging with Coral International Insurance, Confidence Insurance, Prime Trust and Lombard.
The company has maintained a steady rise it its premium income as well as levels of profitability and dividend payments.
Shareholders of Sovereign Trust Insurance had at it's 12th annual general meeting which held in Lagos last year rejoiced at the payment of a six kobo per share dividend from an earning per share of 10.42 kobo.
The highest dividend thus far paid by Sovereign Trust was the 15 kobo which it paid in 2002. The level came to 8 kobo in the following year. The 2005 and 2006 years saw the company maintaining a 6 kobo per share dividend level.
Yet, the shareholders had observed that the company has done well against the backdrop of harsh socio political and economic environment which have characterized the nation's landscape in the past years.
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