How Tony Elumelu Kicked Femi Otedola out of Transcorp
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Power Play: How Tony Elumelu Kicked Femi Otedola out of Transcorp

Transnational Corporation of Nigeria (Transcorp) recently witnessed a powerplay between two Nigerian entrepreneurs Femi Otedola and Tony Elumelu. This comes as Otedola who acquired a large minority stake at Transcorp was kicked out by Elumelu the largest shareholder. The incident which triggered a scramble for the shares of Transcorp has revealed a lot of details about the state of Otedola’s relationship with Elumelu.

In a recent statement, Otedola narrated how Elumelu doublecrossed him on several occasions. He said, “I became Chairman of Transcorp Hotel in 2007 with a shareholding of 5% and unknowingly Tony gradually started buying shares quietly. By the following year in 2008, I went bankrupt in Nigeria. Tony proceeded to take my shares in UBA to service the interest on my loans and he also took over my shares in Africa Finance Corporation, where I was the largest shareholder.”

How Otedola went bankrupt in 2008

Recall that Otedola went bankrupt when oil prices collapsed in 2008. Speaking about the incident he said, “I had about 93 per cent of the diesel market on my fingertips. All of a sudden oil prices collapsed and I had over one million tons of diesel on the high seas and the price dropped from $146 to $34.” 

During that period, Otedola lost over $480 million due to the plunge in oil prices, $258 million through the devaluation of the naira, a further $320 million due to accruing interest and $160 million when the stocks crashed. It was at this point that Elumelu used his UBA shares to service the interest on his loans. 

Otedola also accused Elumelu of secretly buying shares in Transcorp Hotel and outbidding him to acquire Ughelli Power Plant after he disclosed his interest in the plant to Elumelu. He said,

“Years later in 2012 Tony said he wanted to see me so we met in my office where I had previously had a meeting with foreign investors who had not yet departed the premises. Curious to know, he asked what sort of meeting I had had and I disclosed that I wanted to go into the power business, specifically Ughelli Power Plant. Tony quietly went ahead to bid for Ughelli and he outbid me by offering to buy the plant for $ 300 million.”

Otedola and Elumelu : Battle for Transcorp

The Nigerian oil mogul in March made a strategic move by acquiring a 5.52-per cent stake in Transnational Corporation of Nigeria Plc (Transcorp), a publicly traded diversified conglomerate led by Tony Elumelu. The transaction was consummated between an entity owned by Otedola and AMCON. Days later, newsmen reported that he increased his interest in the conglomerate to 6.3 per cent, a development that suggested Otedola attempted to assume control of Transcorp.

However, Elumelu who chairs the conglomerate didn’t take the acquisitions lightly. He fought back by first acquiring an additional 9.7 billion shares in separate deals to increase his combined stake in the group to 10.5 billion shares or 25.9 per cent. Beyond his acquisition, reports say Elumelu tried to reach Otedola for a resolution, but he was unavailable as he travelled to New York. Eventually, a deal was brokered by mutual friends of both businessmen which saw Otedola sell off his shares in Transcorp to Elumelu.

Otedola speaks on his desire to acquire Transcorp

Speaking about the developments a few days later, Otedola wrote, “I offered to buy Transcorp Plc for N250 billion, but unfortunately, my offer was rejected. My goal was to maximize the company’s potential as a Nigerian conglomerate with a market cap of at least N2 trillion instead of the current N40 billion, but it seems some shareholders have a different vision.”

Without revealing details on what transpired between them, Otedola stressed that two captains cannot man a ship. He however said, “But let me be clear: my offer was made with the best intentions for Transcorp Plc and its shareholders. I saw an opportunity to unlock the company’s full potential and create value for everyone involved.”

“It’s important for investors to understand that free entry and free exit are crucial to healthy markets. The scramble for shares after my acquisition is a testament to the value that Transcorp Plc can offer, and I hope the company continues to thrive under new leadership.”

Otedola’s parting message to Transcorp

The Nigerian billionaire who has a well-documented history of waging fierce corporate battles told Transcorp that “I remain committed to the growth and success of Nigerian businesses, and I will always be looking for ways to create value for all stakeholders.” His message to the conglomerate could carry a silent message of a possible return. Furthermore, Otedola appreciated the firm for an “opportunity to engage in this exciting chapter of Transcorp’s history.”

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