Ardova Suffers Investor Apathy, Oil Firm’s Shareholders Lose Investments

On Monday, 6 February 2023, Ardova announced that its majority investor, Ignite Investments & Commodities Limited, has offered to buy out its minority shareholders.

Ignite Investments tabled N17.38 per share offer to purchase 970.7 million units of shares in the hands of the investing public.

This is expected to take Ignite Investments’ controlling stake to 100 per cent from 74.02 per cent stake, enabling the majority investor to take the public entity private. 

The offer is a premium of 22.44 per cent and 24.38 per cent higher than Ardova’s 30-day and 60-day volume weighted average share price of N14.19 kobo and N13.97 kobo respectively, as at November 30, 2022. 

Despite what seems like a mouth-watering offer, the capital market is snubbing Ardova shares, with investors selling off their holdings since Ardova disclosed Ignite Investments’ intention to purchase shares of minority shareholders. 

Prime Business Africa analysis gathered that five days after the offer was announced, interest in Ardova shares among stock investors plummeted, causing the firm’s share price to depreciate from N17.65 kobo a day before the announcement to N16.90 kobo on Friday, 10 February 2023. 

As a result, shareholders lost 4.24 per cent of their investment within five days. This represents a loss of N976.86 million in shareholders’ investment in Ardova. 

This indicates the capital market responded negatively to the offer from Ignite Investments. Such an offer usually encourages demand for a firm’s shares as stock investors position to take advantage of the buy-out offer, and also results in investor apathy as in the case of Ardova. 

Ardova’s management had warned investors ahead in the announcement, “Ardova Shareholders and members of the public are advised to exercise caution in dealing in Ardova’s shares until further information is provided,” the company wrote in its circular dated February 6, 2023.

Meanwhile, shareholders are yet to agree on Ignite Investments’ offer, as Ardova awaits receipt of an order from the Federal High Court to convene a Court Ordered Meeting.