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Send  Share  RSS  Twitter  17 Apr 2012

VENTURES: Former Co-Ops Loosen Pioneer Stakes

 



Recent Western Cape Business News

THREE former agricultural co-operatives in the Western Cape have recently – in different ways – cut loose their valuable shareholdings in consumer brands conglomerate Pioneer Foods.

Leading the way was Swartland-based Kaap Agri, which unbundled its 29% stake in Pioneer into a separate company called Kaap Agri Voedsel. Kaap Agri’s agri-service operations now trade under the name Kaap Agri Bedryf.

Following hard on the heels of Kaap Agri was Overberg Agri, which unbundled half its Pioneer shares to shareholders. Not long after that exercise Overberg sold a chunk of its remaining Pioneer shares in order to settle the tax bill arising from the unbundling exercise.

MKB (or Grainfarmers) – which was recently the target of a takeover by Senwes – also sold off a good portion of its Pioneer holding (nearly 6 million shares) and will now pay a special dividend to shareholders from the proceeds.

Interestingly, the Pioneer shares that were sold off by Overberg and MKB were snapped up by one of SA’s largest asset managers, Allan Gray.

The developments are rather interesting from the perspective of each agri-business. With the Pioneer stake – which sometimes provided insulation against tough times – removed, all three companies could see major changes.

For instance, whether Kaap Agri Voedsel – which is effectively controlled by PSG-aligned Zeder Investments – will eventually unbundle the Pioneer shares to shareholders is an obvious debating point.

Quite possibly, the big discount offered by Kaap Agri Voedsel on Pioneer might spur Zeder into bumping up its effective stake in the months ahead…perhaps even pushing for a complete buyout.

In Overberg’s case, the unbundling of the Pioneer shares was a good way to reward shareholders following some consistent operating performances from the core agri-service businesses. There has been some speculation that Zeder may also be looking to buy out Overberg, an exercise rendered far more affordable with the bulk of the Pioneer shares removed from the equation.

MKB’s decision to sell off a goodly number of Pioneer shares may also relate to corporate action. Certainly Senwes’ recent advance was rebuffed by certain shareholders who felt an offer would not fully value MKB (especially its holding in Pioneer).

It would arguably be easier for MKB shareholders to mull an offer from Senwes (or another large agri-player) based mainly on their company’s core agri-service operations – which have endured their ups and downs of late.


 
 
 
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