Influential businessman Joe Wanjui, Dyer and Blair Investment Bank and investment company Centum — all shareholders of listed agricultural firm Rea Vipingo — have teamed up to oppose the proposed takeover of the sisal producer by two British brothers.
Centum has moved to the Capital Markets Tribunal seeking a declaration that the offer by Richard and Jeremy Robinow to buy Rea Vipingo Holdings violates Kenya’s takeover rules.
The Robinow brothers, who are already majority owners of Rea Vipingo at 57.04 per cent stake, have offered to buy out other shareholders of the Nairobi Securities Exchange-listed firm at Sh70 per share plus a conditional bonus of up to Sh15 per share from future disposal of the firm’s land.
“CMA (Capital Markets Authority) fundamentally erred in law and in fact in failing to appreciate that a promise for a future disposition of the proceeds from the sale of a company’s assets cannot constitute consideration for a take-over offer and is in any event void for uncertainty,” said Centum in its filings to the tribunal.
The new case throws into a spin the intended sale of Rea Vipingo, which has attracted four suitors since the Robinow brothers announced their intention to take over the company last year.
Centum Investment has itself made an offer to acquire Rea Vipingo.
Dyer and Blair Investment Bank is owned by billionaire businessman Jimnah Mbaru.
The Robinow brothers had made their bid for Rea Vipingo through their investment vehicle REA Trading Ltd.
But the Wanjui team contends that the offer approved by CMA is ambiguous and cannot be enforced.
“The sale, disposition or use of assets in any other way by Rea Vipingo Plantations Limited to assist Rea Trading Ltd to purchase shares of Rea Vipingo Plantations Limited is contrary to the provisions of the applicable law.”
The suit effectively puts on ice the takeover bid until the matter is heard and resolved.
The three shareholders, according to sources familiar with the transaction, have planned a charm offensive at Friday’s Rea Vipingo annual general meeting, where they plan to pitch tent and woo shareholders to accept Centum’s offer.
Centum upped the ante for Rea Vipingo in February when it revised its offer to Sh75 a share from the earlier bid of Sh50, sparking a fresh round of intense bidding wars. It currently holds 296,500 shares or a 0.49 per cent stake in Rea Vipingo.
The sisal producer’s stock last traded at Sh27.50 on the Nairobi bourse before it was suspended in November.
Dyer & Blair, which owns 753,200 shares or 1.2 per cent stake at the sisal producer, reckons that the Robinow offer of a future dividend lacks clear timelines and is tied to asset disposal — which will be difficult to enforce once Rea Vipingo delists.
“The future dividend as proposed to Rea Trading will be at the discretion of the directors on undisclosed date and cannot therefore be binding or enforceable by the shareholders whose shares are target of the acquisition,” said Paul Nyaga, deputy chief executive at Dyer & Blair in a protest note to CMA.
Mr Wanjui alleged that the British brothers’ bid is hinged on the speculative value of the company’s vast land stock — nearly 70,000 acres of prime land in Kenya and Tanzania.
“Indeed if the land held by the company is so valuable that its disposal would yield the suggested result to the shareholders, then for what reason did the directors not declare this value?” posed the billionaire businessman who owns 2.6 million shares in Rea Vipingo.
“Further, what does up to Sh15 mean? Could Sh1 be paid in final settlement of the dividend?” asked Dr Wanjui in filings to CMA.
The suit before the tribunal has failed to take off due to lack of quorum. Centum has consequently filed a case at the High Court seeking to compel the Treasury secretary to appoint four more members to the tribunal that currently has only two officials.