Media services firm Scangroup dropped on the first day of trading after an additional 94 million shares created in a buyout deal hit the market. The stock closed Friday at Sh46.25 per share from Sh53 posted a week earlier, a 12.74 per cent drop on a day that 511,000 of the firm's shares changed hands. The additional shares are as a result of the conclusion of the equity stake purchase by Global communications firm WPP , a London -listed company. WPP raised its stake in Scangroup in October to 50.1 per cent, acquiring 94 million additional shares in a cash and stock deal valued at more than Sh8 billion. "The share price is down as a result of dilution," said Johnson Nderi , corporate finance and advisory manager at ABC Capital . Friday was the first day of trading of the new shares. Analysts said that WPP bought the shares to grow its business, but its impact will be felt from next year. "We do believe the transaction was accretive but see the benefits as likely to come later in 2014," said a market report by Standard Investment Bank (SIB). "The transaction has been successfully completed and accordingly, the board of directors of Scangroup has issued the additional shares, all credited as fully paid, in accordance with share sale and share subscription agreement dated 12 August 2013 ," said SIB. WPP also appointed Jon Egger as the new chief financial officer to replace Manish Kumar Shah , an appointment that takes effect from January 1, 2014 . WPP has been increasing its stake in Scangroup gradually over the past few years, WPP acquired a 27.5 per cent stake in Scangroup in 2008 for Sh1.3 billion. In 2011, it increased its direct stake to 29 per cent after acquiring an additional 10 million shares from Scangroup creative director Andrew White following the expiry of the lock-in period after the firm's initial public offer (IPO). The acquisition saw the share price touch Sh78 high, a 52-week high. Analysts had earlier said that despite the expected dilution, the price would not be greatly affected due to expected results after Scangroup's management restructured the firm. Overall the stock market closed at 4,951.06 points, slightly up from 4,913.56 points last week.
Most Popular Stories
- Herbalife Puts Off Meeting for Icahn Talks
- Obama, Ukraine Discuss Russian Incursion in Crimea
- Senate Reaches Unemployment Benefits Deal
- Calumet Photo Files for Bankruptcy
- Navarro Celebrates 2 Years of Vida Mia
- Venezuela Death Toll Reaches 28
- Federal Gov't Deficit Continues to Decline
- Russia Holds Large Military Drills in South
- Ukraine Moves Closer to Joining E.U.
- Dmytro Firtash, Ukrainian Billionaire, Arrested in Vienna