HCI is making an offer of R8.80 to buyout shares in KWV from normal shareholders.
If HCI ends up garnering only a handful of shares there will be awkward questions about deliberately triggering a costly offer.
The costs of the mandatory offer are not documented in the circular to shareholders, but there’s a possibility these costs could actually be more than the value of shares HCI will acquire in the buyout.
At present, shareholders can secure a price of 880c/share on the OTC (over- the-counter) market , which — aside from volume considerations — makes the HCI offer rather superfluous.
KWV’s empowerment partner, Withmore, has clearly signalled its intention to decline the offer. A number of professional investors known to the FM are also likely to give the offer a skip.
Former KWV chairman Danie de Wet — who mobilised farmer resistance to the proposed Pioneer/KWV merger in late 2010 — says few farmer shareholders will sell out at the offer price. De Wet agrees that KWV’s upcoming interim results could be shoddy enough to spook shareholders, but believes farmer shareholders will at least wait for the year-end results before making any decision.
No doubt shareholders also took note of an independent valuation from KPMG, deeming the HCI offer “not fair”.
KPMG’s “most likely value” of 1207c/share is more than 40% higher than HCI’s offer