VENTURES: Cape Agri Sector Shake-Up
Recent Western Cape Business News
THE Western Cape agribusiness sector looks set for a major shake-up with a number of corporate actions underway with Stellenbosch-based investment company PSG – in various guises - seemingly not far from the action.
Early in August Klerksdorp-based Senwes indicated it was holding talks with the Swartland-based Grainfarmers Group of Moorreesburg, which is better known as Moorreesburg Koringboere (MKB).
It seems likely Senwes – which is now one of the most profitable agribusinesses in SA – would look to taking over MKB in a deal that would increase its grain service capacity and give it a reach into new markets (geographically speaking).
The 76 year old MKB is a strong presence in the Swartland grain industry with grain handling and storing the company’s core business.
MKB operates silos at Bergrivier, Koperfontein, Koringberg, Leliedam, Moorreesburg and Moravia for the storage of wheat, lupin, oats and canola.
The company also has seed processing installations at Bergrivier, Koperfontein and Moorreesburg.
At this point it is unclear what price Senwes will be willing to pay for MKB. Another question for Senwes is what it would intend doing with MKB’s significant minority stake in Pioneer Foods, the company’s dog food plant (Petfood Caterers in Moorreesburg) and its retail outlets in Moorreesburg, Velddrif and Langebaan.
At almost the same time as Senwes declared its intentions to advance on MKB, Kaap Agri – another agri-powerhouse in the Western Cape – issued a cautionary notice.
Initially there was some mischievous talk that Kaap Agri too could be considering a tilt at MKB. But sources in the agri-sector believe Kaap Agri may be considering a restructuring exercise that would see its agri-operations separated from its sizeable investment stake in Pioneer Foods (which presumably could be unbundled to shareholders).
One suspects the restructuring at Kaap Agri might have been prompted by its biggest shareholder, Zeder Investments, in a bid to unlock value.
The truth, though, is that Kaap Agri’s own operations – which include the well known Agrimark retail operations – are big enough to stand on their own. Perhaps Zeder – controlled by Stellenbosch-based investment company PSG - even has plans to list Kaap Agri on the JSE?
The third noteworthy development in local agri-business circles involves Cape Town-based Thembeka – which has strong equity links with PSG - making a pitch for a 16% stake in Lichtenburg-based agri-business NWK.
It seems Thembeka is rather determined to get its hands on a slice of NWK as it is offering a 51% premium over the OTC (over-the-counter) share price.
NWK is a sturdy business. It turned over R4.2 billion in the year to end February and generated operating profits of R168 million (of which R104 million came from the Grain division).
Interestingly Zeder, which (as we pointed out earlier) is a PSG subsidiary, already holds almost 9% of NWK – which means that if Thembeka is successful, roughly 25% of NWK will sit in the hands of PSG associates.
The fresh forays into the local agri-business segment comes at a time when rival bidders appear to be thrashing it out for an influential stake in fruit exporting and logistics giant Capespan.
Zeder, which has already secured around 40% of Capespan, has now seen its formal 225c/share offer trumped by a rival ‘open market’ bid of 240c/share by a party wanting to buy 50 million shares (or 15%) in the Bellville-based company.
Weekly business magazine Finweek recently speculated that the rival bidder could be industrial conglomerate Bidvest, which itself owns an array of logistics and food interests.
At the time of going to press, the rival bidder appeared to have picked up less than 7 million of the 50 million shares being bid in Capespan.
The sudden popularity in Capespan – now headed by former Senwes CEO Johan Dique – is quite astounding. Market talk suggests investors are buying into the potential of Capespan’s logistics capabilities.
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