, NAIROBI, Kenya, Dec 3 – Centum Investments has announced its intention to make a competing offer to acquire all the shares in Rea Vipingo Plantations (RVP) at a price of Sh50 shillings per ordinary share.
This follows REA Trading Limited’s offer of Sh40 per ordinary share made on November 13.
Centum currently holds a 0.49 percent stake in Rea Vipingo, while REA Trading is the second largest shareholder with a 20.57 percent stake in the sisal producer.
REA Trading limited is also a beneficial owner of another 36.47 percent held by REA Holdings, in which REA Holdings had indicated in the earlier takeover bid that it would transfer all its holdings to REA Trading.
Centum has indicated that the completion of the takeover will be subject to the fulfilment of, among other things, Centum receiving acceptance of shares which when aggregated with the shares of Centum will represent more than 25 percent of Rea Vipingo Plantation’s shares, indicating that there is a possibility that RVP’s major shareholders might not be willing sellers.
Centum’s offer price is an 81 percent premium to Rea Vipingo Plantation’s last traded average price of Sh27.50.
Rea Vipingo is the largest sisal producer in Kenya and Tanzania, producing 12,000 tonnes of sisal fibre in Kenya annually and 7,500 tonnes of sisal fibre in Tanzania annually.
The agricultural firm has also begun a horticulture project and plans on establishing a wind energy generation facility at its Vipingo estate in Mombasa.
In the 2012 financial year, the company posted an 18.57 percent decline in net profit due to an increase in administrative expenses as well as energy costs in Tanzania.
The first half of 2013 was also a challenging period for the sisal producer, with net profit declining 8.5 percent due to inadequate rainfall levels as well as continued unreliable power supply in Tanzania.
During its first half of 2014 earnings announcement, Centum stated that it was planning on setting up scalable investment grade business lines in agribusiness and power generation and its acquisition of Rea Vipingo Plantations could be a fulfilment of this objective.
The investment company announced a 23 percent rise in pre-tax profit for the half year period ending September 30 to Sh1 billion from Sh837 million over same period last year.
The management attributed the company’s performance to growth in the firm’s private equity and real estate business line.
The firm’s investment income stood at Sh1.2 billion as at September 30, 2013.