Vitafoam set to acquire Vono Products
In what seems as a strategic business decision, foremost bedding manufacturing brand, Vitafoam Nigeria Plc has activated the process to acquire the operations of its age long rival, Vono Products Plc as it plans to cement its place as the premium foam brand in Nigeria.
According to investigations, Vitafoam Nigeria which has a 47.5 per cent stake in Vono Products Plc as a result of the former acquiring majority shares in the latter has commenced pre-merger processes to absorb the operations of Vono Products.
Furthermore, findings also revealed that Vitafoam Nigeria has already begun the procedure of filing the requisite documents for the merger scheme with the apex capital market regulator, the Securities and Exchange Commission (SEC), which is charged with the responsibility of stabilising the capital market, in a bid to formally vet and approve the merger.
Both companies, quoted on the Nigerian Stock Exchange (NSE), have formally notified the management of the Exchange about the imminent merger. The business amalgamation may however lead to the delisting of Vono Products Plc, leaving Vitafoam Nigeria as the only quoted foam manufacturing company in the NSE.
As well as possessing immense assets and alongside parallel business interests, Vitafoam Nigeria is seeking to absorb Vono Products to reduce the costs of operations as a result of the economic challenges in the Nigerian business environment and as well, enhance the synergies inherent in the expanded business.
Before 2010, Vitafoam Nigeria had a 24.96 per cent equity stake in Vono, giving it the majority but less than outright controlling equity stake in the company. Other significant investors in Vono then were Enterprise Bank and BGL which held 5.56 per cent and 7.37 per cent equity stake respectively.
However, with the purchase of more shares in 2010, Vitafoam Nigeria now controls a majority shareholding in Vono Products Plc.
Vono products in 2012 launched a N840 million rights issue to strengthen its operations to remain a stand-alone subsidiary and also pursue expansion programmes as part of efforts to strengthen the company on the path of sustainable profitability.
However, despite rigorous efforts made by the company, both Vono Products and indeed Vitafoam Nigeria have continued to struggle with sluggish sales and depressed margins as a result of devaluation of the Naira, the rising inflation and the high cost of importation of materials used in manufacturing of bed products.