Express Kenya CEO Hector Diniz's bid to buy out the company has failed after he was unable to garner support of shareholders holding a minimum combined stake of 75 per cent.
This means that the real estate firm will retain its listing on the Nairobi Securities Exchange (NSE) and shareholders who had accepted Mr Diniz's offer of Sh5.5 per share will not be paid by the executive.
A section of Express Kenya's significant shareholders rejected the offer after it emerged that the company was worth much more based on the value of its 15.7 acres of land in Nairobi's Industrial Area.
This marks a rare defeat for an acquirer of an NSE-listed firm, with most other buyouts completed on their original or enhanced offer prices.
Mr Diniz, who already owns a 61.64 per cent stake in the company, on Tuesday published a statement saying that he received the backing of shareholders with a 9.78 per cent interest.
This raised their combined holdings to 71.42 per cent, falling short of the 75 per cent minimum target.
"Following the above outcome, the company will not be de-listed from the Nairobi Securities Exchange," Mr Diniz said through his investment vehicle Diniz Holdings Limited.
"Although the offer was not successful, Diniz Holdings would like to thank all Express Kenya shareholders who supported the offer."
The CEO had an option of raising his bid or extending the offer period but decided to let the proposed buyout lapse.
If the buyout was successful, Mr Diniz would have booked a paper gain of Sh772 million, being the difference between the value of the company's land and its liabilities.
This is more than 10 times the total of Sh74.7 million that the CEO had earmarked for buying out the minority interests.
The buyout failure now turns the focus on the loss-making company's strategy to turn around its operations.
Ahead of the takeover, the company announced that its plan to build 248 apartments on the Industrial Area land had stalled after failure to get bank financing.