Ignite Investments and Commodities in 2019 completed the acquisition of 74% shareholdings (controlling stake) in Ardova Plc previously identified as Forte Oil Plc. Very recently, Ignite has announced its intent to buy out the remaining shares of the company held by minority shareholders at N17.38 which is a 24% premium on the 60-day weighted average share price of N13.97 as at 30th November, 2022 which was the last trading day prior to the offer.
Ardova Plc is currently listed on the Nigerian Stock Exchange (NGX) at N16.90 per share (Feb 7th). The company has a N22 billion market capitalization and a free float of 339,962,574 shares which implies a cost of N5.9 billion for Ignite to complete the buy out at the offer price. If this transaction goes through, the company would be delisted from the stock exchange.
So what?
Ardova is an indigenous and integrated energy company involved in the distribution of petroleum products, with some of its operations in Ghana. Currently the company has a total external debt of N55 billion on its balance sheet including unsecured corporate bonds and a loss after tax of N7.6 billion.
The news of possible delisting led to about a 4.25% drop in the share price of the company from N17.65 to N16.90 as a result of negative market sentiments. Ardova won't be the first oil and gas firm to exit the stock market, last year we had Mobil (11 Plc) delist on grounds of restructuring and need for greater focus on revenue generation and strategic opportunities. Delisting from the stock exchange usually comes as a cause for concern and can have significant impact on the company’s visibility and liquidity. However, firms are able to operate with less regulatory obligations.