Re: GSK bitter pill

I agree with Townsend (BusinessDay, Monday, July 8, 2013, page 17), and this has been a rather subtle if not consistent trend since the unfortunate and backward looking legislation “The Investment Promotion Commission Act No. 16 of 1995” was passed into law.

In one clean sweep the gains of the Indigenisation Acts of 1973 and 1977 were reversed as it paved the way for these parent company corporate actions and has served to consistently reduce the role and participation of ordinary investors in the companies concerned. Imperialism and colonisation full circle! More on that some other day.

A derisory offer, pitched below the current market price, is as condescending as it gets unless there has been a recent spike in the valuation resulting from the news to make the current price unreflective of actual value.

But that is not the only matter. At a time when African bourses are courting suitable companies to list, the shareholder action of a significant index company that for all intents turns a public company into a private one and sucking liquidity out of the market is a major setback. It is, as with previous proposals of this kind, opportunistic and convincing arguments hardly ever robustly made, if at all, to shareholders or on a roadshow of sorts to underscore that the minority is a factor. The often stated reason “that the growth of the company is better explored as a private company” surely does not apply here! I am also not aware that GSK NG is in such need of a substantial cash injection that it cannot reasonably expect minority shareholders to participate in.

I have long since given up on the boards of these companies, so called “captains of industry” with multi appointments almost all handpicked by the predator, and can only hope that the involvement of fresh face institutional investors like Townsend’s fund will serve to draw attention to the relevant issues.

Oyesoji Oyeleke

21 Marina, Lagos