Suspicious trades seen ahead of CCNN merger announcement

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There was an unusual spike in volume traded of the CCNN stock on Monday 25th June 2018, three days before the corporate announcement of a proposed merger with Kalambiana Cement Company Limited.

 

This suggests that investors might have pre-empted the announcement of the deal or insiders may have had information leaked.

 

BusinessDay looked into the market reaction of the announcement and realized a 2 percent increase in the share price and a 76 percent increase in the volume traded since the announcemen

 

However, volumes of the equity traded in the past weeks increased from 812,000 on Tuesday to 3,300,000 at the end of trading on Friday 22nd June 2018.

 

On Monday June 24th, the total volumes traded, sky rocketed to 32,000,000 which represented an 881 percent increase from the last trading day and from Tuesday till the end of trading on Friday, volumes of CCNN stocks traded average of over 200,000.

 

BUA International Limited has its subsidiary, Damnaz Cement Company as a majority shareholder in CCNN.

 

Kalambiana Cement Company Limited, another wholly owned subsidiary of BUA, merger will consolidate CCNN and its aim to create synergies and strengthen the competitive poition of the enlarged company amongst cement manufacturers in the company.

 

CCNN has had the best performance on the Nigerian All Share index with its year to date percentage performance over 100 percent. The low competition where the company supplies cement is a major driver of utilisation rates for the company.

 

The cement maker is efficient in deploying shareholders’ resources in generating higher profit as net profit margins hit 16.25 percent in 2017, a 0.60 point increase from 10.23 percent recorded five years ago.

 

CCNN shares would be issued and allotted to all shareholders of Kalambaina Cement in exchange for their shares in Kalambaina Cement at an agreed ratio based on the CCNN’s 30-day volume weighted average closing price to June 22, 2018 of N25.99 per share.

 

Source: BUSINESSDAY

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