Why Nigeria’s biggest oil merger of 2015 failed to materialize
Earlier in the year, indigenous player Seplat announced its intention to acquire or pursue a merger with Afren, a UK-listed upstream oil player with operations in Nigeria. If successful, the deal would have been a win-win for both companies as Seplat’s capabilities would have been bolstered while Afren would have secured a breather from its current economic turbulence.
According to multiple news sources, Seplat was interested in the deal because Afren’s share price had tanked more than 80 percent and it had successfully secured debt rescheduling from its creditors. Keen to boost its operations after securing a $1.4 billion loan from four Nigerian banks, Seplat was initially excited about the prospects of the deal. However, Afren later indicated it was pulling out of further talks as Seplat failed to produce a letter of intent after multiple extensions of the deadline to do so.
In its latest Annual General Meeting (AGM), Seplat’s CEO Austin Avuru explained why his firm reversed its original intention. “Particularly because we didn’t have an opportunity to have the kind of engagement we wanted with the creditors to Afren,” he explained. “We thought that unless we have fruitful and full engagement with the creditors, it will not be in our interest and in the interest of shareholders to go ahead.”
Despite the failure of this merger, other successful acquisitions are expected in Africa’s largest oil producer as its indigenous players continue to position themselves to cash in on the oil and gas potentials in the country.
By Emmanuel Iruobe
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