Centum ups stakes with sugarcoated bid for Rea Vipingo

Centum Investment has launched a sugarcoated counter-offer for NSE-listed agricultural firm Rea Vipingo, throwing a spanner into the works for two British brothers who are seeking to acquire entire shareholding of the company.

Centum has offered to pay shareholders up to Sh50 per share compared to the Sh40 pitch made by London-based REA Trading (REAT) Limited, owned by Richard Robinow and Jeremy Robinow.

If Centum succeeds in getting acceptances of its offer from shareholders representing more than 25 per cent of Rea Vipingo’s issued shares, then it will scuttle the British duo’s bid to acquire and de-list the company since they will fall short of the minimum 75 per cent threshold required for the transaction to sail through.

“We believe our offer presents a superior option to the one currently on the table and it is our belief that all shareholders will seriously consider this offer,” said Centum’s CEO James Mworia.

Centum currently holds 0.5 per cent shares of Rea Vipingo Holdings, while the British brothers have a controlling interest in 57 per cent of the land-rich company.

Centum has said that it intends to keep Rea Vipingo as an Nairobi Securities Exchange (NSE) listed firm, an early indication of the divergent strategy from that of the Robinow brothers who want to take the company off the bourse.

“The 25 per cent threshold of acceptances is necessary to ensure that we have a minimum stake to ensure that REA Vipingo remains a listed company,” he added.

The Sh50 per share offer values Rea Vipingo at Sh3 billion, which is Sh600 million more than the valuation that the Robinow deal had attached to the sisal producer.

READ: British brothers offer to takeover NSE listed Rea Vipingo

Centum’s bid to acquire all shares in Rea Vipingo could however trigger yet another counter-offer by the majority shareholders, who have an option of bettering their price.

“They can change the terms; being an irrevocable offer means they cannot withdraw but it doesn’t mean they can’t enhance it,” said the managing partner of IKM Advocates, James Kamau.

Centum Investment will rely on its offer being accepted by minority shareholders to see it acquire a controlling stake. Analysts said that would put it in a position of power as the majority shareholders will require its support to pass crucial decisions, such as their de-listing bid.

“They are trying to get value out of the transaction or get an influence in a future transaction,” said Standard Investment Bank analyst Eric Musau.

Mr Musau drew parallels to the Carbacid acquisition deal of 2009, in which Centum took up ownership in the company after a take-over bid by BOC Gases flopped only to gain over Sh780 million after only two years of holding on to the stock.

READ: Centum nets Sh782m from Carbacid deal

REAT’s offer of Sh40 per share had drawn criticism from some analysts who held the valuation was low given Rea Vipingo vast land ownership.

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 land is in two estates in Kenya. Dwa estate 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 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.

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.

“They have looked at the company assets and seen the same value the majority shareholders have seen and are seeking a stake in it,” said Mr Musau.