Centum Investment and Rea Trading Settle Rea Vipingo Plantations Takeover Stalemate
Centum Investment Company Limited (“Centum”) and REA Trading Limited (“REAT”) have entered into a settlement agreement in relation to their two competing bids for takeover of Rea Vipingo Plantations Limited (“RVP”). REAT initially made a takeover offer to acquire all issued ordinary shares of RVP on 25th April 2014 while Centum made a competing takeover offer on 2nd May of the same year.
Centum subsequently filed an appeal before the Capital Markets Tribunal on 9th May 2014 challenging the decision by the Capital Markets Authority to approve REAT’s offer. The High Court issued an injunction blocking the takeover of Rea Vipingo as a result. The two competing parties entered into talks aimed at breaking the stalemate and came into a settlement agreement with the following salient features:
- Centum acquires 9,646 acres of land in Vipingo at a price of KES 180,000 per acre and RVP’s subsidiary Vipingo Estates Limited which owns approximately 900 acres of land at a price of approximately Kes.340 million. The transaction prices totals to approximately KES 2.1 billion. According to the latest valuation commissioned by RVP, the market value of the land is KES 175,000 per acre;
- Centum withdraws its takeover offer of RVP Limited and its appeal against the bid made by REAT before the CMA tribunal;
- REAT will proceed with its takeover bid and it has indicated it will pay the full amount of an additional cash top-up of KES.15 per share, which together with its offer price of KES.70 per share, makes the total offer to RVP shareholders KES 85 per share.; and
- RVP will keep ownership of and continue harvesting all the sisal currently growing on the land over its lifespan while areas with mature sisal that has been harvested will be available to Centum.
The proposed sales of land and RVP’s subsidiary, Vipingo Estates Limited, are subject to the shareholders of RVP passing an ordinary resolution at a general meeting to be held on 28th April
2015. REAT (which controls 57% of the issued shares of RVP) has undertaken to Centum to vote in favour of the resolution.
Speaking about the settlement, Centum CEO, James Mworia said, “The agreement reached is a win-win for all parties involved especially RVP shareholders who will benefit from the increased offer price of KES 85 and will therefore realize a higher price for their investment. Centum shareholders will also benefit from the acquisition by their company of a prime parcel of land in Vipingo.”