To revisit history is not to revise it: The Access Bank takeover

There have been a few writeups and commentaries on the above subject lately, and it is quite amusing how an event that represents a classic case of the familiar boardroom coup, in the form of the hostile takeover of a bank from its previous owners several years ago, is now suddenly being criminalised. The acquiring parties in the transaction have been dubbed “political thieves” in one instance and projected in similar uncomplimentary epithets in several other instances.

We may not approve of it, all right, but without going into the specifics of the institution and personalities involved in the case at hand, hostile takeovers are widely accepted forms of acquiring businesses. They also do occur with something of uncommon regularity the world over, every now and then.

Hostile takeovers refer to the acquisition of targeted corporations, often against the express or tacit wishes and preferences of their existing board and management. Plus, they are perfectly legal and effectively regulated, with adequate provisions to deal with errant behaviour on either side. They are distinct from friendly takeovers, in which the two parties to the transaction mutually agree to cooperate towards the same result.

Often accomplished by stealth, a hostile takeover takes place when an acquiring entity, also described as the acquirer or aggressor, desires to attain full control of the target company by way of the surreptitious acquisition of a significant enough quantum of its shares from existing shareholders. More often than not, that is achieved without the prior knowledge, sanction, and/or cooperation of the target company’s existing management and/or owners, who are subsequently bought out in the end.

It is imperative to stress at this point that the entire setting around the hostile takeover undertaking is centered around the application of the willing-buyer, willing-seller principle; between and amongst holders of the target company’s stocks and potential investors desirous of acquiring same, and it is achieved through the instrumentality of the appropriate medium for the trading of the stocks.

Through such legal stock transactions, the stake of the original owners or majority shareholders gradually gets diluted as the shares exchange hands and new buyers are brought in; a process that can be accomplished within a relatively short time span or over an extended period from start to finish. Once the aggressor has acquired a reasonable enough proportion of shares to trigger a takeover, the deed is as good as done.

Of course, in all probability, the target company would view a hostile takeover as nothing short of a brazen assault or an undesirable invasion aimed at undermining the independence and effective control of its existing management team. And rightly so too. Conversely, advocates and/or supporters of hostile takeovers would argue that they help stimulate and promote impactful positive changes and improvements in the acquired entity. These can manifest in the form of improved corporate governance practices, along with enhanced operational efficiencies and increased shareholder value in the acquired entity.

Now, we may not approve of the methods employed in the case of Access Bank acquisition well over two decades ago today, for example, and that is fine. But the next logical and honest question we should all ask ourselves is whether or not the acquisition and subsequent takeover of the bank from its initial promoters has achieved the above-stated objectives.

And a dispassionate response to that question should necessarily take into consideration the current standing of the bank in the industry, vis-a-vis the state it was prior to the acquisition, while also not losing sight of the fact that many of the bank’s contemporaries established at or about the same time with it have since gone under.

It is also worthy of note that the same or similar hostile takeover practices that some of the writeups in reference actively seek to criminalise are still happening, both in the nation’s financial services industry and in other critical sectors of the economy even as we speak.

Indeed, the latest of such takeovers occurred just recently when Femi Otedola effectively took over as Chair of First Bank of Nigeria (FBN) Holdings Plc in a similar fashion, by virtue of his becoming the largest shareholder of the bank through his direct and indirect holdings. Another instance, albeit a failed one, would be that of the attempted takeover of Transcorp Plc, with investments in the Hospitality, Power, and Oil & Gas sectors, also by the same investor not long ago. This was, however, promptly resolved amicably through negotiations between the two parties, in the overall best interest of the organisation.

Other notable examples of hostile takeovers from across the world include: the acquisition of Time Warner by America Online Inc. (AOL), regarded as the biggest and one of the most aggressive takeover bids to date; InBev’s acquisition of Anheuser – Busch, maker of Budweiser in mid-2008; the acquisition of PeopleSoft by Oracle towards the end of 2004; that of RBS and ABN Amro in October 2007; and Kraft Foods’ takeover of Cadbury, amongst several others.

Of course, there are several initiative-taking and reactive defensive strategies out there that can be employed to guard against hostile takeovers and/or respond to them, which the original promoters of Access Bank obviously failed to take advantage of at the time. but that is an entirely different discussion for another day.

Usman writes from Garki, Abuja