In what currently stands as an "expression of interest", Pioneer has offered to purchase the entire share capital of its Paarl neighbour for nearly R827,7 million, or R12/share. If the "interest" solidifies into a firm offer, and is approved by shareholders, a quarter of the sum will be settled in Pioneer Foods shares, with the balance settled in cash.
Danie de Wet, former KWV chairperson and owner of Dewetshof Wines, said the offer was "ridiculously low". "The financial statement of KWV has put the conservative nett asset value at R18,40/share, so anything below that isn’t a fair price. The current shareholders, excluding Zeder and PSG, are definitely not interested in that price."
De Wet estimated that wine farmers could hold 20% to 30% of shares. "KWV is an asset that wine farmers have built up over the generations and a lot of wealth is still lying in that asset." At a glance, KWV’s shareholding is simple: five major shareholders hold just over 65%; Zeder holds 35%; Withmore 18%; Keet 7%; Vinpro 3%; and Rootstock Investments 2%. Individuals and institutions hold the balance of 35%.
But the PSG Group has full control of Zeder (41%), indirectly making PSG the largest shareholder in KWV. PSG is also the largest shareholder in Pioneer. Zeder owns about 42% of Kaap Agri, and Kaap Agri owns 28% of Pioneer. KWV chairperson Thys du Toit owns Rootstock and sits on the boards of PSG and Pioneer.
"Zeder shareholders should question why Zeder is selling valuable KWV shares when the beneficiary on the other side – Pioneer – has a majority in Zeder," said De Wet. The KWV board has appointed a sub-committee to consider the offer, and an independent expert to provide advice should the transaction proceed.
De Wet said shareholders who feel strongly against the deal, but can’t attend the shareholder meeting wherethey have to vote on it, should make use of proxies to vote if they want to block it. Du Toit said KWV would do what’s best for the business. "The emotional ownership of the company is much broader than the shares in trade, and this is something that the KWV board recognises and respects," he said. –