KENYA- Seaboard’s Corporation’s offer of US$0.40 per share for Unga Group will wait longer to close after a section of Unga’s significant shareholders termed the offer by the multinational conglomerate as inadequate, citing the company’s assets.
The extension indicates that Seaboard has not yet met minimum requirement for a 75% stake needed for the transaction to complete and it gives minority shareholders of Unga Group more time to reconsider the offer, reported Business Daily.
For the transaction to proceed, it requires Seaboard, which has a 2.92% stake in the miller to receive approval from shareholders owning at least 21.1% by tendering their shares.
With the offer set to close early June has now been pushed to June 28, allowing the miller’s shares which were to be suspended on that date to continue trading on the Nairobi Securities Exchange (NSE) until the new offer closure date.
“In order to allow more time for shareholders to consider the Seaboard offer and respond accordingly, Seaboard has obtained the approval of the Capital Markets Authority to extend the closing date by 10 working days,” the multinational said in a statement.
The buyout offer was endorsed by Unga’s board of directors, rejecting the US$0.66 per share valuation saying the company would have to be liquidated to unlock the value.
Low chances of raising buyout offer
In May, Seaboard ruled out the possibilities of raising the US$0.40 per share buyout offer despite some of Unga’s investors trading the stock above the value on the Nairobi Securities Exchange (NSE).
The multinational had earlier mentioned that the possibility of raising the offer before the June 6 period could happen if it may be required to respond to a competing bid if one came around.
Optionally, it may be comfortable taking some shares offered by the offer price whether it hits the threshold required to take the miller private or not.
The buyout-offer by Seaboard values Unga at Sh3 billion, 18.8% below its book value of US$29.67 million or US$0.49 per share as of June 2017.
Seaboard says Unga, as a publicly traded company, suffers from several disadvantages namely, disclosure of competitive information, costs of regulatory compliance and an ownership structure that discourages the entry of new strategic investors.
According to them, if successful, the buyout should be completed by August 2.
Philip Ndegwa family has a controlling 50.93% equity in Unga, having worked to take the miller from a publicly traded company to a private one.
Other investors holding a minority stake include Rakesh Gadani, Moses Thara, BID Portfolio Management and Broadway Bakery.