Vipingo Ridge Golf Resort in Kilifi County. Rea Vipingo Plantations own 70,000 acres of land in Kenya and Tanzania. Photo/FILE
What you need to know:
Minority shareholders of the Nairobi Securities Exchange-listed firm have been offered a 47-per cent premium to sell their stake in a transaction that values the company at Sh2.4 billion.
The offer immediately attracted criticism from some analysts who argued that the price is too low, because the land that it owns, especially the one located near Mombasa, is highly valuable and not fully reflected on the balance sheet.
REAT is owned by two brothers — Richard and Jeremy Tobinow — who reside in London, and who come from a family that has owned assets in Kenya since the 1950s.
Listed agricultural firm Rea Vipingo Plantations (RVP), which owns nearly 70,000 acres of land in Kenya and Tanzania, has received a buyout offer that could see it de-list its shares from the bourse.
Minority shareholders of the Nairobi Securities Exchange-listed firm have been offered a 47-per cent premium to sell their stake in a transaction that values the company at Sh2.4 billion.
The takeover offer was announced Thursday by London-based REA Trading (REAT) Limited, which is owned by two British brothers.
Based on Wednesday’s average price of Sh27.50 a share, the premium is 43 per cent.
The takeover price values the company at Sh2.4 billion, meaning that shareholders will be Sh750 million richer if they all take up the offer.
But the offer immediately attracted criticism from some analysts who argued that the price is too low, because the land that it owns, especially the one located near Mombasa, is highly valuable and not fully reflected on the balance sheet.
“It is still early days to talk about the offer without the information memorandum, but I would say that the company is undervalued even at Sh40 a share given the large amount of valuable land it owns,” said a stockbrokerage CEO who declined to be quoted fearing he could influence direction of the transaction.
The sisal producing company Rea Vipingo Plantations (RVP) owns 28,105 hectares of land (equivalent to 69,449 acres), with about half of it in Kenya and the other in Tanzania.
The Sh2.4 billion price tag could roughly value the land at about Sh35,000 per acre, excluding buildings, equipment and movable assets that the company owns.
The land is in two estates in Kenya. Dwa estate is in Kibwezi and has 22,205 acres while Vipingo is at the Coast and has 10,570 acres. In Tanzania, the land RVP owns amounts to 36,645 acres.
The brokerage firm’s chief executive said that he had sold his shares in the company “because their price was so low for so long that he did not expect that it would appreciate at all, but was convinced it did reflect a fair price”.
REAT is owned by two brothers — Richard and Jeremy Tobinow — who reside in London, and who come from a family that has owned assets in Kenya since the 1950s.
Currently, the two brothers together own 57.04 per cent of the RVP. They hold the shares through REA Holdings Plc which has a stake of 36.47 per cent and REA Trading which has 20.57 per cent share ownership.
To complete the deal, at least 90 per cent of the stake held by minority shareholders must be submitted for the offer. The top 10 shareholders, on the basis of December 31, 2012 data, own 69.83 per cent of all shares in RVP.
“Assuming that the takeover offer is declared by REAT to be unconditional in all respects it is intention of REAT to propose that the shares of RVP be delisted from the NSE in compliance with the regulatory requirements for such measure,” said REAT in a notice put in the newspapers Thursday.
RVP is the largest sisal fibre producer in Africa, although it also runs cultivation of horticultural crops and has a spinning factory where it converts sisal fibre into yarns and twines.
“The bulk of group sales are made to a related party (Wigglesworth) at market price,” said an update by Standard Investment Bank.
Shares will get an offer document within the next 75 days after which they will have at least 30 days to accept or reject the offer.
The transaction is expected to be completed no later than April 30, 2014, unless the buyers and the regulator agree to delay it.
