The market value of Limuru Tea has jumped to Sh1 billion after US-based private equity firm CVC Capital Partners made a takeover offer to the agricultural firm’s minority owners.
Limuru Tea’s market capitalization jumped from Sh760 million on Tuesday last week –when the share price stood at Sh320— to touch a 52-week high of Sh420 on Thursday.
The stock has gained 42.37 percent over the past 12 months though on small volumes. The company has less than 200 retail investors, with its stock trading infrequently on the Nairobi Securities Exchange.
CVC Capital is expected to disclose its offer price for 48 percent shareholding of Limuru Tea after it acquired the majority stake from Unilever.
The US fund bought a 52 percent stake in Limuru Tea from Unilever triggering the law that compels investors who directly or indirectly buy more than 25 percent of a company to make a takeover offer to the rest of the shareholders.
Limuru Tea has been in the red over the past two years, booking a net loss of Sh9.5 million in 2021, worse than the Sh3.6 million registered in 2020 which has kept its share price low.
The counter is also very illiquid, with only 9,700 shares or 0.4 percent of the 2.4 million issued shares traded in the exchange in the period between January to June.
The announcement by CVC Capital to make a buyout offer has prompted the price gain as shareholders anticipate the US fund paying a premium on the company’s recent trading price.
The rally puts the market value of the minority stake targeted by CVC Capital at Sh483.8 million.
The buyout offer has been made amid a bid by minority shareholders to derail the transfer of the Unilever stake to CVC Capital which formed a special purpose vehicle registered in the Netherlands, Puccini Bidco B.V, to take up the 52 percent stake in Limuru Tea.
Two minority owners (Joe Wanjui and Wainaina Kenyanjui) who together control 30 percent of the company are asking to be allowed to place a counter offer against the private equity fund which is buying the British multinational stake in Limuru Tea.