Zeder, the South African agribusiness investment company, has confirmed it wants to buy out minority shareholders in Capespan Group Limited, the export business in which it is the majority shareholder.
Public trading in Capespan shares was suspended by South African’s Financial Services Board in mid-July 2014, leading to growing speculation that Zeder would look to boost its 71 per cent stake and offer Capespan much-needed liquidity by securing some of the remaining percentage.
In a letter to shareholders, Zeder said it had notified the Capespan board of directors of its “firm intention” to make an offer to acquire all the ordinary shares in Capespan not already held by Zeder and members of Capespan’s management – the latter accounting for just under 4 per cent.
The Capespan board, meanwhile, has appointed an independent board that excludes any Zeder representatives in order to evaluate the plan and advise shareholders in due course on whether it is regarded as “fair and reasonable”.
Zeder’s offer is expected to be based on a share-swap deal in the order of 85 Zeder shares for every 100 Capespan shares rather than a simple cash buyout, with such a deal equating to an offer price of R6.50 per share, or roughly R578m, and representing a notable premium on the most recent official Capespan share price.
Chris Logan of Opportune Investments, one of the minority shareholders in Capespan, told Business Day that Zeder’s offer was a welcome one after nine months of share inactivity.
“What is comforting about getting Zeder scrip (in settlement) is they have shown decisiveness in their underlying investments, especially ensuring proper leadership is in place,” he said.
Zeder CEO Norman Celliers confirmed Capespan shares would not be relisted in the near future, but instead those unlisted shares would be converted to Zeder ones, which are listed.
“This solves the liquidity problem they currently face while also benefiting from a more diversified exposure through Zeder,” he told the newspaper.
Zeder said its intention in securing full ownership of Capespan was to improve cash management and various operational initiatives throughout the larger group for the benefit of all shareholders.
For its part, Capespan’s board believes the administrative costs and corporate burden associated with having a very large group of fragmented minority shareholders, who jointly do not exert influence over Capespan, are “not ideal or sustainable”.
Capespan is involved in global fruit production, procurement, marketing and distribution.
Over the past 70 years, Capespan has developed its portfolio into three complementary divisions, namely fruit, farming and logistics, which Zeder said were “increasingly less interdependent and individually more profitable”.
Capespan has an annual turnover in excess of R7bn and has operations in 12 countries, providing services and produce to more than 60 countries across four continents.
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