Cape merger to create agriculture powerhouse
By Marc Hasenfuss - Mar 2nd 2018, 10:13
A new agribusiness powerhouse is heading for listing on the JSE after proposals by Western Cape-based Overberg Agri and Acorn Agri to merge.
Despite the drought in the Western Cape raising questions about agricultural prospects, a circular was sent to shareholders in Caledon-based Overberg Agri last week detailing plans to "amalgamate" with Somerset West-based Acorn to form a "leading national agriculture and food investment company".
The new entity will be a hybrid agribusiness with Acorn — which has African Rainbow Capital and Sanlam as backers — largely an investment company and Overberg predominantly an operating company.
In a letter to shareholders Overberg chairman, Douw de Kock said the new business could be listed on the JSE in the near future.
He said the proposed merger was crucial for the sustainability of Overberg’s agricultural business and the need to maintain competitive service levels.
De Kock also said the proposed merger would drive growth by creating synergy between the assets and business models of both companies.
"The combined business will hold an attractive blend of local and export-orientated businesses with exposure to export earnings, which hedges shareholders against rand devaluation and local economic and political challenges," he said.
Acorn already holds a 25.5% stake in Overberg, acquired from PSG Group-aligned empowerment group Them-beka Capital in 2014. At the moment the JSE hosts only one pure agribusiness investment company, PSG-controlled Zeder Investments, with market capitalisation of about R10.5bn.
Zeder is the largest shareholder of JSE-listed agriservices counter Kaap Agri, which offers similar services to Overberg. In 2014 Zeder sold its minority shareholding in Overberg.
Some market watchers had tipped Kaap Agri as a potential suitor for Overberg.
The proposed company merger will create a sizable agribusiness entity, with the independent expert valuing Overberg Agri at between R2.1bn and R2.3bn and Acorn at between R2.2bn and R2.35bn.
In the year to end-February 2017 Overberg revenue was R3.16bn and bottom-line profit was R151m. Acorn — via its mainstay investments — had revenue of R844m and bottom-line profit of R110m in the year to end-June.
Overberg Agri offers grain-storage services, a retail facility, mechanisation equipment, financial services and packaging solutions as well as holding investments in Boltfast (steel fasteners), Bontebok Limeworks, the Bredasdorp Abattoir and Moov (fuel distribution). It also owns a 2.1% stake in JSE-listed consumer brands giant Pioneer Foods worth R600m.
Acorn has investments in fruit marketing companies ACG Fruit (73%), Grassroots Group (59.5%) and Montagu Dried Fruit and Nuts as well as a 25% stake in Lesotho Milling. It also has a holding of 11.1% in Port Elizabeth-based agribusiness BKB.
De Kock said the Acorn team was well known to Overberg. In 2004 Pierre Malan, the co-founder of Acorn Private Equity, assisted BNK Landbou Groep and CRK Landbou to merge and create Overberg Agri. De Kock said Acorn had also provided corporate finance and advisory services to Overberg Agri.© BusinessLIVE MMXVIII
AB InBev to float Asian business in 2019’s second biggest IPO
22/09/2019 - 10:14
AB InBev will kick off a second attempt to spin off its Asian business in Hong Kong with the launch of an initial public offering (IPO) worth up to $6.6bn that could be the world’s second-largest flotation in 2019.
Digital footprint helps farmers step into future
22/09/2019 - 09:59
The potential to increase Africa’s agricultural yields through the strategic use of data could place the continents’ farmers at the heart of tomorrow’s global economy.
Samsung and KOO win big at the 21st Sunday Times Top Brands Awards
20/09/2019 - 15:12
Samsung and KOO have been announced as South Africa’s Overall Favourite Brands, winning the Grand Prix Awards in the respective Business and Consumer sectors of the 21st Sunday Times Top Brands Survey.
Retail sales remain muted with consumers under pressure
20/09/2019 - 14:31
Retail sales for July marginally declined to 2 percent year on year as sales growth continued to reflect a muted demand in South Africa, with consumers’ discretionary income under strain.
Embracing workforce transformation in a digital world
20/09/2019 - 13:53
Workforce transformation affects all aspects of business and companies must plan for the impact it is having and will continue to have on operations. Nicol Myburgh, Head of the HR Business Unit at CRS Technologies, says the evolving business landscape means companies must start thinking now about the skills they need for the future.