Allan Odhiambo
14 December 2009
Listed agricultural firm, Eaagads, is set for change of ownership in a deal expected to trigger shifts in the local coffee industry.
This follows a deal between Waguthu Holdings(K) Limited, incorporated in Kenya as WHL, and Manhattan Coffee Investment Holdings, incorporated in Mauritius as MCIH.
They jointly exercised an option granted by Intercultures SA incorporated in Luxembourg and Socfinaf Company Limited that is incorporated in Kenya.
"By agreement dated December 10,2009 MCIH has agreed that the sale and purchase of the Socfinaf shares should be completed and be held by WHL, a company in which MCIH and others own a controlling interest," the companies said in a joint statement on Friday.
Socfinaf is the holder of 9.9 million ordinary shares of Sh1.25 each in the issued share capital of Eaagads Limited representing approximately 62 per cent of the issued share capital of Eagaads.
"Upon completion of the transaction, WHL, indirectly will acquire effective control of Eaagads. But WHL does not wish to make a take-over offer for Eaagads pursuant to the regulations and accordingly intends to apply to the Capital Markets Authority (CMA) for an exemption under regulation five," they further said.
The companies, however, maintained that Eaagads' listing on the alternative investment segment of the Nairobi Stock Exchange(NSE) would be upheld.
"The reason for the exemption application are that as a result of the transaction the percentage of the shares held by the Kenyan public will be better served by maintaining the listing of Eaagads on the NSE," they said.
Conclusion of the deal is however subject to approval by Finance minister Uhuru Kenyatta under the provisions of the Restrictive Trade Practices, Monopolies and Price Control Act.
A senior director of Waguthu Holdings, Mr Steve Mwagiru, declined to comment on the transaction believed to have cost about Sh200million based on the market value of the Eaagads shares.
" I'm not ready to discuss this matter," he told Business Daily on phone even as market players predicted major shifts in the coffee marketing and dealership front.
Socfinaf enjoyed a market share of about eight per cent, indicating the substantial level of influence the new owners are likely to have in the industry where once dominant players such as Kenya Planters Co-operative Union (KPCU) have faltered.
The news of the deal came just days after the industry witnessed the entry of a new player, the Kenya Co-operative Coffee Exporters Limited (KCCE).
The Co-operative Bank of Kenya-backed firm last Tuesday said it had signed contracts with coffee farmers amounting to 20,000 tonnes equivalent to 37 per cent of the 54,000 tonnes that the Coffee Board of Kenya (CBK) expects from the current 2009/10 crop season.
Industry analysts said the acquisition move by Waguthu may be intended to bolster its position from the expected competition.
Promising future
Most players, however, said they did not understand why Socfinaf had opted to give up its stakes in Eaagads despite the promising fortunes in the industry where prices have in the recent months stabilised on quality production and positive sentiments from key international markets.
The Thika-based Socfinaf, has in the recent years made a mark in the local coffee industry through the development and promotion of modern crop husbandry practices which has won farmers affiliated to its good earnings at the weekly Nairobi Coffee Exchange (NCE) on the strengths of quality.
The company had its products certified by international brands such as UTZ.
Records showed that Socfinaf came into being following economic instability in the far East after the Second World War that saw a French Group with large interests in palm oil and rubber plantations in Malaysia deciding to look for agricultural investments in East Africa as a security in case of adverse developments in Asia.