To­tal on­slaught at Capes­pan

Sec­ond bid­der comes to the ta­ble

Finweek English Edition - - FRONT PAGE - MARC HASENFUSS

WHAT IS IT about Zeder In­vest­ments – the agribusi­ness arm of PSG – that brings out the best in mi­nor­ity share­hold­ers? Finweek re­ported re­cently on how Capes­pan’s huge value of­fer­ing was driv­ing Zeder’s bid to gain more in­flu­ence at the Bel­lville-based fruit mar­ket­ing group.

How­ever, it seems Zeder’s for­mal bid to buy out mi­nor­ity share­hold­ers at what ini­tially ap­peared to be a pre­mium priced of­fer of 225c/share has brought a ri­val bid­der to the ta­ble.

No sooner had Zeder dis­closed some open mar­ket buys that pushed its stake in Capes­pan to 32,7% than a bid for 50m Capes­pan shares at 240c popped up on over­the-counter (OTC) trad­ing screens. That’s a size­able bid worth R120m and rep­re­sent­ing 15% of Capes­pan’s is­sued shares.

But it ap­pears an­other party could be look­ing to block Zeder’s ad­vances – which, for Zeder, might bring back hor­ri­ble mem­o­ries of what tran­spired at KWV Hold­ings re­cently. Read­ers will re­mem­ber Zeder’s at­tempts to or­ches­trate a merger be­tween KWV and Pi­o­neer Foods’ Ceres Bev­er­ages were scup­pered by vo­cif­er­ous mi­nor­ity share­hold­ers.

Who could the ri­val bid­der be? Capes­pan MD Jo­han Dique wasn’t giv­ing much away. “The process whereby takeovers are done is highly reg­u­lated… We there­fore com­mu­ni­cate re­spon­si­bly what we’re obliged to do, as well as all ad­di­tional in­for­ma­tion so as to ful­fil our re­spon­si­bil­i­ties to­wards our share­hold­ers.”

Dique says: “What we’ve pub­lished so far is all that we’re pre­pared to do and we have no fur­ther com­ments.”

To date, Capes­pan has ac­knowl­edged an “ex­pres­sion of in­ter­est” and listed the cur­rent bid spreads on Capes­pan’s OTC mar­ket. The spreads at the time of writ­ing saw bids for 33m shares at 225c, 2m at 230c, 50m at 240c and 1m at 245c. Some mar­ket watch­ers joked per­haps it was Hosken Con­sol­i­dated In­vest­ments – which ac­quired Zeder’s stake in KWV – mak­ing a late dash for Capes­pan.

But the smart money reck­ons Ir­ish fruit com­pany To­tal Pro­duce plc (TP) is the most likely party to pitch a ri­val bid to Zeder. TP holds 47m shares or 14% of Capes­pan. Fin

week emailed ques­tions to TP but at the time of writ­ing hadn’t re­ceived word from the com­pany.

Pre­sum­ably TP would be hunt­ing a big­ger stake in Capes­pan for strate­gic rea­sons. TP’s an­nual re­port pretty much lists Capes­pan as one of its fa­cil­i­ties and – per­haps more sig­nif­i­cantly – TP CE Rory Byrne has been a non-ex­ec­u­tive di­rec­tor of Capes­pan since 2000.

The cur­rent bid spread shows a de­ter­mi­na­tion to build an ob­struc­tive stake and one might for­give Zeder (which, we should re­mem­ber, has ac­cu­mu­lated the bulk of its stake closer to the 100c mark) for opt­ing to sell out at a se­ri­ous profit. We doubt very much Zeder will con­tem­plate that… yet.

But as we have ar­gued pre­vi­ously, there’s some­thing more to Capes­pan than just a 250c net as­set value – even though it’s very likely re­tail in­vestors (some al­ready op­ti­misti­cally of­fer­ing scrip at 400c) will be tempted to jump ship at the cur­rent of­fer prices. In­vestors might find a clue in its an­nual re­port, which shows just how sig­nif­i­cant (and prof­itable) Capes­pan’s lo­gis­tics divi­sion – com­pris­ing port ter­mi­nal op­er­a­tions, ship­ping and cold stor­age – has be­come over re­cent years.

It ap­pears an­other party could be look­ing to block Zeder’s ad­vances – which might bring back hor­ri­ble mem­o­ries of what tran­spired at

KWV Hold­ings re­cently

Finweek reck­ons its lo­gis­tics divi­sion – es­pe­cially its Fresh Pro­duce Ter­mi­nal, where Transnet has ap­par­ently of­fered Capes­pan a lu­cra­tive ar­range­ment – will pro­vide the steam for Dique’s AGM pre­dic­tion that Capes­pan is set for dou­ble digit growth in re­turn on equity.

Come to think of it, we won­der whether it’s that far-fetched to pon­der whether ship­ping gi­ant Grindrod might not look to board­ing a value-laden Capes­pan.

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