Zeder Investments, which owns 27.7 per cent of the Capespan Group, has launched a bid for control of the company with an offer totalling R486m (€49.8m) or R2.25 (€0.23) per share.
Zeder, which is owned by financial services and investment group PSG Group Ltd, has been increasing its stake in the Capespan Group gradually over the past three years.
The offer is reported to be part of Zeder's investment philosophy of taking equity stakes in mainly unlisted firms in the agricultural, food, beverages, food processing and related sectors.
Commenting on the move, Zeder said its offer to minority shareholders – including major Dublin-based fresh produce company Total Produce, which has a 12 per cent stakeholding – represented a premium of almost 30 per cent on Capespan's 30-day, volume-weighted average share price, or more than 66 per cent on its three-month average price.
'Against the background of market conditions Zeder believes that the offer is fair because Capespan shares has in the past traded below their net asset value, liquidity is a problem for shareholders and this represents a fair chance for them to dispose of their shares at a premium,' it said.
Zeder CEO Antonie Jacobs said the firm expected the offer would be attractive enough to convince those minority shareholders to cash in their shares.
'Zeder could inject capital needed to expand Capespan's domestic and global footprint. The offer is to everybody and we will be happy with whatever we get,' Jacobs said.
'It will cost us R486m if everybody accepts. The rationale is that the fruit market share has reduced a lot and it will take time and a big capital investment to grow it. That requires risk and finance, and we think as a shareholder of reference we can play a big role.'
In its offer letter, Zeder said the market share of Capespan's fruit distribution business had decreased over the years and the environment in which it operates had changed dramatically.
'This represents both a challenge and an opportunity, and Capespan will have to adapt in order to overcome the same and achieve growth going forward,' said the group.
'This is not without risk, and finance and patience will be required. A shareholder of reference, like Zeder, will be best suited to assist Capespan in addressing these challenges,' it added.
August announcement
Zeder's offer was announced through one of South Africa's Afrikaans daily newspapers in the form of a joint statement from Zeder and Capespan.
In the statement, the board of Capespan said it would offer its own views to shareholders in early August before allowing them to decide on the matter.
Johan Dique, managing director of Capespan, told media representatives in Cape Town that the company planned to continue with its activities and implementing its growth strategy in order to create more value for the company.
'Capespan continues to focus on client service on both sides of the value chain and will continue its logistical services,' he declared.
Lengthy process
According to the announcement, the takeover bidding process could last until November this year: the share offer will officially open on 13 July 2011 and the provisional closing date is Friday, 11 November 2011.
With the process set to get underway soon, observers see this as the final step in the conversion of Capespan from a fully grower-owned company – as it was when it was established through the merger of Unifruco Ltd and Outspan International in 1998 – to a company where growers have limited or no direct shareholding.
As this change has taken place and as direct grower interests have slowly waned, there has been significant growth in the number of grower-exporters, with leading growers setting up marketing companies either on their own or in association with other growers.
Zeder's bid follows the recent disposal of its interest in major South African wine and spirits producer KWV.
Observers say this divestment has left PSG and Zeder Investments with additional cash for new acquisitions.
