US Conglomerate seeks to buy out Unga Group minority shareholders at 37% premium

New York Stock Exchange listed Seaboard Corporation limited is seeking to buy out minorities in Kenya’s Unga Group Holdings under a proposed scheme of arrangement in which it will offer a premium price for the shares.

The US Conglomerate in a notice filed at the Nairobi Securities Exchange says it will offer a premium price of Sh 40 for each ordinary share, which is a premium of 36.75% compared to Wednesday’s closing price of Sh 29.25. The buyout values Unga Group at Sh 3.0 billion.

However, a number of market analysts have raised concerns about Seaboard’s offer of ksh 40 per share which is way below Unga Group’s book value of about Sh 70 per share.

Unga Group would have to de-list from the Nairobi Securities Exchange once the scheme to buy out minorities is approved by the Capital Markets Authority. The company expects to complete the deal before 30th September 2018.

In its full year results ending 30 June 2017, Unga Group revenues increased slightly by 3% to KES 19.5 Billion compared to KES 18.9 Billion in the previous period. Sales volume was up by 1.8%. The company’s operating profit was down by 71.75% to KES 201.8 million compared to KES 714.3 million in the previous financial year.

Sea Board is currently one of the largest companies engaging in pork production and processing and ocean transportation. In Africa, the company has operations in a number of companies that are engaged in commodity merchandising, grain processing and sugar production.

Seaboard of Delaware owns a 2.92% in Unga Group and Victus (a company related to Seaboard) owns 50.93% of the Kenyan listed company.

Seaboard Corporation’s subsidiaries and affiliates employ more than 23,000 people in more than 45 different countries, mostly in the U.S., Latin America and Africa. With net sales of approximately $6.67 billion annually, Seaboard Corporation is #387 on the 2014 Fortune 500 list.