Shareholders clinging on for a maximising of value at agribusiness investment company Zeder should perhaps not hold their collective breath.
Efforts to sell Zeder’s last two remaining assets — specialist seed business Zaad and fruit distributor Capespan — could prove tricky with higher agricultural input costs and global supply chain disruptions likely to temper the enthusiasm of potential buyers.
At the release of half-year results to end August, CEO Johann le Roux said Zeder was in discussions with a number of parties around the possible sale of Capespan and Zaad.
Zaad is valued at almost R2.4bn with Capespan at just over R1bn — making up the bulk of the group’s investment portfolio value of R3.6bn.
Le Roux told Business Day no timeline for the sale of the remaining two investments had been set. “We are speaking to [interested] parties, and we’ve made progress. But outside factors have been delaying the process.”
There might also be some agitation among shareholders around the sale of the last two remaining assets since the smaller Zeder unit — with three employees — still incurred head office costs of about R20m.
Le Roux noted: “Our immediate focus will remain on ensuring that our existing companies position themselves competitively, maintain market share and conserve balance sheets while continuously driving for operational and cash generation improvements.”
SmallTalkDaily analyst Anthony Clark said Zaad and Capespan were good businesses, but both had a challenging 12 months ahead in terms of higher input costs and margin squeeze. “It’s going to be a difficult sell for Zeder ….”
Le Roux stressed Zeder would not rush to secure deals for either Zaad or Capespan. “We are not going to do a bad transaction for our shareholders.”
Zeder has enjoyed some success in recent asset sales that followed the ground-breaking transaction to sell its stake in Pioneer Foods to PepsiCo in 2020. The group fetched almost R1.6bn for its 98.2% stake in The Logistics Group in March, and more recently sold off its interest in Zambia-based Agrivision Africa to ForAfric for R160m.
Zeder’s SOTP (sum-of-the-parts) value per share was stated at 269c as at end-August. This means the share price is offering a 30% discount to the latest SOTP value.
The latest SOTP is well down on the 466c a share recorded at the end of February — but reflects the recent unbundling of Zeder’s major stake in JSE-listed agri-services conglomerate Kaap Agri as well as the payment of a 92.5c a share special dividend (worth about R1.42bn) in May.
Zeder is due to pay another special dividend of R154m in November, which will leave about R463m (or 30c a share) in cash reserves.
Le Roux did highlight Zeder’s recent wealth creation for shareholders.
“Zeder’s share price was trading at 423c as at February 28 2019. Since then Zeder returned value of 456c a share to shareholders, by way of special dividends of 353c and an additional 103c in terms of the recent Kaap Agri unbundling. This is while still retaining a Zeder share at the current market price of 189c and with a SOTP value of R269c as at October 3.”
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