Cutix Plans Major Acquisition for Expansion, Profit

By Dipo Olowookere

If the latest move by the board and management of Cutix is anything to go by, then shareholders may soon begin to smile because they will get value for their investment in the organisation.

Recently, Cutix announced its intention to acquire one of the players in its market, Adswitch Plc, which was delisted on the Nigerian Stock Exchange (NSE) in 2016.

According to reports, the board of Cutix wants this company to enhance its business expansion and boost the profitability of the company, which should in turn lead to more reward for investors.

But to make this a reality, 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 Friday, October 25, 2019.

The board wants authorisation to enter into any agreements and execute any other documents necessary for and incidental to effecting the resolution on acquisition of Adswitch.

Information about Cutix

Cutix is an indigenous wire and cable company incorporated in 1982, which has 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 cable industry.

Information about Adswitch

Adswitch Plc is a related electrical switchgears Nigerian company also incorporated in 1982 and it has a close relationship with Cutix Plc.

The firm was delisted from the NSE due to harsh operating environment. The company was listed as a second-tier stock in 1991 and filed for voluntary delisting at the NSE.

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.

Market analysts then described the harsh business climate as operational challenges due to influx of fake and substandard products and uncompetitive manufacturing costs in Nigeria as well as the costs and requirements of maintaining the listing.

Dipo Olowookere is a journalist based in Nigeria that has passion for reporting business news stories. At his leisure time, he watches football and supports 3SC of Ibadan. Mr Olowookere can be reached via dipo.olowookere@businesspost.ng

more recommended stories

%d bloggers like this: