NIGERIA Law and Practice Contributed by: Tosin Ajose, Izuchukwu Ubadinma, Deborah Leshi and Precious Omope, DealHQ Partners
Exchange (NGX) within ten business days, with details included in the annual report. Where a shareholder’s interest begins to near the mandatory takeover threshold, the bidder must dis - close and state its intentions under SEC takeover rules to ensure transparency. Nigerian law does not impose any formal “put up or shut up” requirement, but the SEC can intervene if prolonged stakebuilding or speculation threatens market stability, directing the acquirer to clarify intentions or make a formal offer. 4.2 Mandatory Offer The mandatory offer threshold in Nigeria is 30% or more of the voting rights of a company, or where the holder of 30% or more of the voting rights acquires an additional 5% or more of the voting rights. A manda- tory offer is automatically triggered when there is an acquisition of up to 30% or more of the voting rights in a public company, whether directly or in concert with other parties. 4.3 Transaction Structures Although mergers are recognised as a viable structure for acquisition in Nigeria’s energy and infrastructure sector, they are not commonly used for the acquisition of public companies, and are generally less preferable because they involve lengthy regulatory procedures and multiple layers of approval from regulators. Inves- tors tend to prefer share or asset acquisitions and joint venture arrangements, which are more practical, flex- ible and faster to implement, especially for projects requiring timely financing and operational continuity. 4.4 Consideration and Minimum Price Acquisitions of public companies in the technology industry are typically structured as cash transactions, as they offer shareholders immediate value and sim- plify regulatory approval processes with the Securities and Exchange Commission (SEC) and other regula- tors. Although stock-for-stock consideration is legally permissible, it is less common due to valuation com- plexities, share liquidity challenges and the additional disclosure and registration requirements imposed by the SEC. In merger transactions, parties often agree on a payment structure that is either fully or partly in cash to compensate shareholders of the merging enti- ties. Likewise, in takeover or tender offers, cash pay-
ments are the most typical form of consideration, as they provide immediate value to shareholders, reduce valuation disputes, and simplify the transaction and regulatory approval process. There is no statutory minimum price for a takeover or business combination; transaction prices are gener- ally negotiated between the parties, except where a court determines “fair value”. Contingent value rights or other mechanisms to bridge valuation gaps are not typical in public company acquisitions in Nigeria. However, parties sometimes adopt earn-out arrange- ments, deferred payments or milestone-based con- sideration in private energy or infrastructure trans- actions, particularly where project performance or revenue projections influence valuation. 4.5 Common Conditions for a Takeover Offer/ Tender Offer In Nigeria, takeover offers are commonly subject to conditions designed to protect both the bidder and the target company. Offers are often conditional on a minimum level of shareholder acceptance, typically more than 50% of the voting shares, to ensure that the bidder acquires effective control. They are also generally subject to the receipt of all necessary regula- tory approvals, including clearance from the SEC, the Federal Competition and Consumer Protection Com- mission (FCCPC) and other sector regulators. Other typical conditions include the absence of any material adverse change in the target company’s financial or operational position, and confirmation that the target has complied with all representations and warranties during negotiations. The SEC, however, restricts the use of overly broad or discretionary conditions that could allow a bidder to withdraw the offer at will or create uncertainty in the process, ensuring that all shareholders are treated fairly and that the takeover proceeds transparently. 4.6 Deal Documentation In Nigeria, it is customary to enter into transaction agreements in connection with a takeover offer or business combination as these agreements set out the transaction structure, the terms and conditions of the offer, representations, warranties, covenants and
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