KENYA- Agro-processing company Kenya Orchards Limited (KOL) has announced plans to sell 84.4% of its shares to Africa Mega Agriculture Center (AMAC) Limited, an agricultural company, in a deal valued at KES 210 million (US$1.6 million).
If the deal is approved, the agro-processor transfer 10.8 million shares to AMAC. The KES 210 million (US$1.6 million) cost of the private transaction is pegged on KOL’s current share price of KES 19.50 (US$0.15).
KOL revealed in a public notice, “Shareholders of KOL are advised that KOL was, on June 14, served with a notice of intention by AMAC to acquire up to 10,863,537 ordinary shares in KOL.”
The shares designated for sale comprise those owned by KOL’s top three shareholders- Westpac Holdings (34%), Tharakashi Keshav Patel (33%), and Vipul Tharkashi Patel (15%).
The deal is subject to approval by the Competition Authority of Kenya (and the Capital Markets Authority, although it is very unlikely that it will not go through.
In a statement, KOL assured shareholders that AMAC has no intention to acquire majority voting rights and that the share sale will not lead to the company’s delisting from the Nairobi Stock Exchange (NSE).
“In its Notice of Intention, AMAC, a strategic investor, notes that it plans to diversify KOL’s business line in order to improve KOL’s financial performance while leveraging on the strong household brand and long heritage of KOL,” KOL said in the statement.
KOL reiterated the investor plans to diversify its product portfolio and improve its financial performance. KOL’s profits after tax (PAT) dropped by 8.1% in the year ended December 2023 from KES 1.91 million (US$14,763) in the previous year to KES 1.77 million (US$13,681).
The move comes after KOL and many other players in the agriculture industry have struggled with inflation and high prices in the past few years, which have negatively affected profit margins because of increased costs. KOL hopes to leverage AMAC’s broadened expertise and experience in the agriculture sector to reach a broader customer base and respond to the challenging business environment currently being experienced.
