Companies seek approval from Rea Vipingo shareholders

Money Markets

A view of Vipingo Ridge Golf Course in Kilifi. Photo/FILE  

By Victor Juma, vjuma@ke.nationmedia.com

In Summary

• Centum and REAT have both dispatched acceptance forms to Rea Vipingo shareholders who will be legally bound by whichever offer they consent to in writing.
• Shareholders have been sent the forms alongside an independent report by the agricultural firm’s board on the competing offers.

Investment firm Centum and two British brothers have launched a charm offensive among Rea Vipingo shareholders, seeking approval for their competing buyout bids for the agricultural company.
The war for the hearts and minds of the company’s owners started in earnest during Rea Vipingo’s annual general meeting last Friday even as the bidding firms, Centum and Rea Trading (REAT), continued their fierce court battle to determine whose offer has legal legs.

Centum and REAT, which is owned by British brothers Richard and Jeremy Robinow, have both dispatched acceptance forms to Rea Vipingo shareholders who will be legally bound by whichever offer they consent to in writing.

Shareholders have been sent the forms alongside an independent report by the agricultural firm’s board on the competing offers.

The dispatch has, however, left out a third bidder for the company, Vania Investment Pool, whose lower approved offer appears to have been knocked out of the race to buy the land-rich company.

Ordinary shareholders of the agricultural firm are expected to weigh the opportunity costs and risks that each competing offer presents before signing up for either bid.

Centum’s current offer stands at Sh75 per share, valuing the Nairobi Securities Exchange-listed firm at Sh4.5 billion. The investment firm already owns 296,500 shares of Rea Vipingo, a 0.49 per cent stake.

Rea’s board, in an independent opinion to shareholders, says that the risk in Centum’s offer lies in its demand that it get an acceptance rate of more than 25 per cent to proceed with the acquisition.

“If Centum does not achieve a 25 per cent acceptance and does not waive this condition, shareholders who have accepted the Centum offer may not then be able to accept the REAT offer,” the directors said in a statement.

The Robinows’ latest offer stands at Sh70 per share with a possible top-up of Sh15 per share, which is expected to arise from distribution of gains from the sale of the company’s land holdings within five years of takeover.

READ: Rea Vipingo shareholders likely to take the higher offer price

The brothers already own 57 per cent of Rea Vipingo and are seeking to buy the remaining 43 per cent to take full control of the sisal producer.

Rea directors say the risk in the offer lies in the fact that it is Sh5 lower than Centum’s and that the additional amount may not be paid.

“Neither REAT nor the directors provide any assurance that this additional amount will ever be paid,” the directors said in a statement.

It is this promise to pay an additional Sh15 that has seen Centum argue that the Robinows’ offer is uncertain and should be rejected by the markets regulator.

The parties have lodged their complaint with the Capital Markets Authority’s tribunal seeking to have Rea strike out the top-up promise.