Cutix Plc has announced a plan to acquire Adswitch Plc, a related electrical switchgear company that was delisted on the Nigerian Stock Exchange (NSE) in 2016.
Adswitch, a Nigerian company, was incorporated in 1982 and it has a close relationship with Cutix Plc.
The board of Cutix stated that it the acquisition is intended to enhance business expansion and boost the profitability of the company.
The board has put a special resolution on the acquisition as one of the items for approval of shareholders at the forthcoming annual general meeting on October 25, 2019.
The directors of Cutix, a wire and cable company, are seeking the mandate of shareholders to enable them to enter into any agreements and execute any other documents necessary for and incidental to effecting the resolution on the acquisition of Adswitch.
Cutix is an indigenous company wholly owned by Nigerians. Incorporated in 1982, the company gradually transformed from a private limited liability company formed and owned by friends and family members to become a publicly quoted company.
Cutix recently invested about N300 million on a new extension of its factory as part of efforts to increase the installed production capacity of the cables-manufacturing company. The new factory extension was expected to impact positively on the production capacity and efficiency of the company and to enable it to further improve its performance notwithstanding the increasing competition in the cables industry.
Adswitch had delisted from the NSE due to what the directors of the company then broadly described as the harsh operating environment. The company, which was listed as a second-tier stock in 1991, filed for voluntary delisting at the NSE.
Market analysts then described the harsh business climate as operational challenges due to the influx of fake and substandard products and uncompetitive manufacturing costs in Nigeria as well as the costs and requirements of maintaining the listing.
Prior to its delisting, Adswitch had struggled with dwindling margins and sales. Audited report and accounts of Adswitch for the year ended April 30, 2012, showed that turnover dropped from N32.72 million in 2011 to N30.7 million in 2012. It posted a loss before tax of N10.34 million in 2012, albeit a better position that loss of N19.04 million recorded in 2011. Loss after tax also stood at N10.73 million in 2012 as against N19.69 million in 2011.