Against the backdrop of palpable fear among some investors that the recent merger proposal between Flour Mills Nigeria Plc and Nigerian Bag manufacturing Company (BAGCO) would result in loss of investment values, operators in the market have said the merger plans are indeed a good development for the investors in both companies.The operators said that rather than cause erosion of value, the merger will make shares holdings in the company (Flourmill) a better bargain in terms of prices and return on investment at the end of the present financial year.According to the Chief Executive Officer of Lamberth Trust & Investment, Mr David Imafidon Adonri, 'BAGCO has been a subsidiary of Flourmills. The proposed merger is meant to deepen the synergy between them. Shareholders of both companies will be better for it. 'However, the share capital of BAGCO will be cancelled and the shareholders allotted Flourmills shares in the agreed exchange rate. Corporate combinations, mergers and acquisitions are normal transactions in the stock market. They are not disincentives to listing. They actually enhance the quality of listed companies when the combinations succeed.'The President of Progressive Shareholders Association, Mr Boniface Okezie, however, said that if the two merger companies want their plans to fly, there must be proper valuation of the assets of BAGCO, 'If they want merger it should be done properly. When BAGCO came to the market for listing after their public offer, investors were not properly informed about the value of their asset. 'There should be proper valuation of assets so that those that want to exit will be properly be compensated and those who want to remain will do so. Anything short of this will be contested by shareholders.' In their own comments, the Presidents of Renassaice Shareholders Association and Proactive Shareholders Association, Ambassador Olufemi Timothy and Mr Taiwo Oderinde, noted that means combining the two businesses, 'Only the shareholders of BAGCO Plc will receive the ratio of exchange of Shares. It's a good development, shareholders will be better off.Flourmills of Nigeria had recently notifiedthe Nigerian Stock Exchange (NSE) of its plansto merge withNigerian Bag Manufacturing Company Plc ('Bagco') and Northern Bag Manufacturing Company Limited (Bagco-North).According to the notice, the three companiesare expected to merge into one entity with Flour Mills Nigeria Plc as the surviving entity.Flour Mills and Bagco are public companies listed onthe floor of NSE, while Bagco-North is a private limited liability company.The merger will therefore, result in the transfer of all assets, liabilities and undertakings of Bagco and Bagco-North to Flour Mills Nigeria Plc.Consequently, the entire issued share capital of Bagco and Bagco-North, respectively would be cancelled and the minority shareholders of Bagco will have an option to elect for cash or shares in Flour Mills at a price to be determined using mutually agreed valuation methods.
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