SOUTH AFRICA – Zeder Investments, a South African agribusiness group, has secured an agreement to acquire 40 percent shareholding in East African Seeds (EAS) Company.
The investment in EAS, a seed company with operations in Kenya, Tanzania, Uganda, Rwanda and Zambia is expected to support Zeder’s expansion in East and Central Africa, reports Business Day.
The PSG-controlled agribusiness giant said that its subsidiary, a Zaad it had identified East and Central Africa as an important growth area for both seeds and agrochemicals.
Zaad operates as the company’s agri-input firm. It has holdings in companies that specialise in seed production, plant nutrition and agrichemicals.
“Upon completion, this investment will provide Zaad with access to these markets,” the company said.
The group also said that the introduction of Zaad’s seed products and genetics “will enhance the profile of the EAS group of companies”.
The deal whose value has not yet been disclosed also gives Zeder and option of acquiring an additional stake in future.
Zeder, which has substantial stakes in listed food business is also expected to fetch US$412 million from the sale of its 28.23 percent stake in Pioneer Foods to US multinational food company, PepsiCo.
The company plans to use this to settle or reduce debt, and potentially declare a special dividend, thereby returning a portion of the net proceeds to shareholders.
It was anticipated that the cash proceeds would flow towards the middle of February 2020.
Zeder also holds significant shareholdings in several food and beverage companies including in Quantum Foods, Capespan, Kaap Agri and Agrivision Africa.
In April this year, the agribusiness conglomerate said that the companies under its control were open to making acquisitions citing that some of their competitors are being revaluated.
During its previous financial year, the company delivered comparable recurring earnings and managed to lift its headline earnings per share by 0.4%
Zeder CEO Norman Celliers said negative economic conditions persisted during the period under review while investor sentiment towards the sector remained subdued.
“Zeder has enviable strategic equity interests in leading organisations that span the agribusiness value chain.
“While the broader investor sentiment towards the sector and country is clearly negative at present and the external operating environment remains challenging, the underlying fundamentals of Zeder and its portfolio have not changed,” said Celliers.
“Our companies are well positioned to deliver on their respective long-term strategies. Despite inevitable cyclicality, the strength of our defensive portfolio should ensure that we deliver the required shareholder return over time,” he added.