Rea Vipingo asset re-valuation set to raise bidding wars
A section of Rea Vipingo Sisal Estate in Kilifi County. The plantations firm has raised the book valuation of its assets by Sh400 million in its newly released annual report for 2013, raising the stakes in a takeover battle for the company that has attracted three rival bids. Photo/FILE
What you need to know:
Rea Vipingo’s valuation has come under sharp focus since majority shareholders announced a take-over bid for the sisal producer late last year, with the price attached to its vast land holdings in Kenya and Tanzania being particularly contentious.
Buildings are valued at Sh270 million, while plant and machinery are valued at Sh954 million, representing an appreciation of nine and seven per cent respectively from 2012.
The value of biological assets, which include sisal and horticulture produce, appreciated by 35 per cent to Sh883 million between September 2012 and September 2013.
Plantations company Rea Vipingo has raised the book valuation of its assets by Sh400 million in its newly released annual report for 2013, raising the stakes in a takeover battle for the company that has attracted three rival bids.
Rea Vipingo’s valuation has come under sharp focus since majority shareholders announced a take-over bid for the sisal producer late last year, with the price attached to its vast land holdings in Kenya and Tanzania being particularly contentious.
In its annual report for last year released on Monday, Rea Vipingo announced a 17 per cent increase in the value of its total assets to Sh2.8 billion compared to the book valuation in 2012, but did not indicate a market value for its land.
“It is important for them to value the assets as per the current market rates so that investors receiving the bids from interested parties can make informed decisions on the offers,” said Standard Investment Bank research analyst Eric Musau. According to disclosures made in the annual report, Rea Vipingo holds 28,105 hectares (69,500 acres) of land in Kenya and Tanzania.
Standard Investment Bank had estimated in a research note released last year that this vast estate could be valued at over Sh10 billion.
Rea Vipingo only discloses that land under leasehold as at September 2013 was valued at Sh208.03 million but does not give the value of land under freehold.
The value of the leasehold land was unchanged from a year earlier.
Analysts also reckon that the value of Rea Vipingo’s land holdings would also be determined by its intended usage.
“The key issue is what the potential buyer of the company will do with the company’s land. Looking at the Vipingo estates, for instance, the income streams from sisal farming and real estate ventures would be very different,” said ABC Capital manager for corporate finance and advisory Johnson Nderi.
Company chairman Oliver Fowler told shareholders in a statement that the board decided to commission an independent asset valuation of the company and its subsidiaries after receiving three separate buyout offer notices.
“Once the formal documents containing the proposed offers have been received, your board will be circulating shareholders and making their recommendations as required by law,” said Mr Fowler.
Buildings are valued at Sh270 million, while plant and machinery are valued at Sh954 million, representing an appreciation of nine and seven per cent respectively from 2012.
The value of biological assets, which include sisal and horticulture produce, appreciated by 35 per cent to Sh883 million between September 2012 and September 2013, helping raise the company’s net profit by 16 per cent to Sh442.46 million. Its liabilities also went up by seven per cent to Sh701.5 million.
Mr Musau added that disclosure that the company was still awaiting formal offer documents from interested companies is important to investors since this means they have to wait for a longer period before being able to access the value of their investment that is locked in by a share trade suspension.
The share is currently suspended from trading at the Nairobi Securities Exchange due to the takeover bids, with its last trading price from November 2013 standing at Sh27.50.
The first bid was received from the company’s majority shareholder, Rea Trading Company (REAT), which offered to buy out all the 25.77 million shares it does not hold at a price of Sh40. This offer valued the shares at a premium of 45 per cent above Rea Vipingo’s last trading price of 27.50.
Financing the deal
REAT holds about 57 per cent of the agricultural firm, and its bid which would see it spend Sh1.03 billion to acquire the entire firm values Rea Vipingo at Sh2.4 billion.
London-based brothers Richard and Jeremy Robinow, who own Rea Trading, announced in November last year that they had secured a loan of $8 million (Sh694 million) from Commercial Bank of Africa towards financing the deal.
They deposited another $4 million (Sh347 million) in the lender as part of the deal, which they hope to complete before April.
Centum Investments on its part has made a Sh2.98 billion counter-offer for all the Rea Vipingo shares not in its holding, quoting its offer at Sh50 per share and valuing Rea at Sh3 billion. Centum already owns 296,500 shares or 0.49 per cent of Rea Vipingo.
The third bid has come in from Www.Bid Investment Company, which has offered Sh55 per share, a 96 per cent premium over the current price, which values Rea Vipingo at Sh3.3 billion.
