Otedola’s Multi-Billion Naira Payday: Transcorp Shares Sold to Elumelu at Premium Price

Billionaire businessman Femi Otedola has reportedly cashed out on a multi-billion naira payout by selling his shares in Transcorp to fellow tycoon Tony Elumelu at a premium price.

The deal, which is believed to have taken place on Thursday, saw Elumelu buy a significant stake in Transcorp from Otedola. The latter had emerged as the largest shareholder after silently acquiring 2.6 billion shares, or 6.3% of the company.

An anonymous source claiming to be in close contact with both billionaires revealed that Elumelu allegedly paid Otedola a premium of 400% on Transcorp’s closing price on Thursday to obtain his block of shares.

This suggests that Otedola, who held 2.6 billion shares or 6.3% of the firm, received approximately N12.5 per share and walked away with a payout of N32.5 billion.

The move comes amidst a tense corporate battle between the two business moguls, with rumors circulating that Elumelu had attempted to reach out to Otedola after he emerged as the largest shareholder to discuss a possible buyout.

Initially, Otedola, who was said to be in New York at the time, rejected the offer, but a 400% premium on shares he acquired at about N2.6 a unit may have forced his hand.

According to sources close to Otedola, the chairman of Geregu Power was interested in taking control of Transcorp’s lucrative power assets from Tony Elumelu. Geregu Power, which is publicly-traded, operates one power plant in Kogi State with an installed capacity of 435 MW and a market cap of over $1.6 billion.

Meanwhile, Transcorp, which owns two power plants in Delta and Rivers states with a combined capacity of over 2,000 MW, has a market cap of less than $300 million.

Analysts had long pointed out that Transcorp was significantly undervalued. In 2013, Otedola acquired the underperforming State-owned power asset with an effective capacity of less than 100 MW and raised its capacity to 435 MW. Geregu Power generates 70-80% of the power supplied into the grid.

Recently, Geregu Power doubled its shares in just six months and paid out N20 billion ($43.5 million) in dividends to shareholders for the 2022 fiscal year.