KWV Shareholder Rejects Pioneer Food Group's Takeover Offer as `Derisory'

Pioneer Food Group Ltd.’s 828 million-rand ($120 million) takeover offer for KWV Holdings Ltd. is “derisory” and undervalues South Africa’s second-largest wine and spirits company, said Chris Logan, a KWV shareholder.

The 12-rand a share offer “is a joke” because KWV’s accounts for the fiscal year through June gave the company a net asset value of 18.69 rand a share, he said in a telephone interview from Cape Town today, adding that he holds proxy votes from investors to vote against the deal. He declined to say how many shares he holds or what shareholders he represents.

Pioneer Foods, South Africa’s third-largest food producer, wants to buy 92 year-old Paarl, Western Cape-based KWV to diversify earnings and use its distribution network in the country to increase sales of KWV’s top wine brands. A quarter of the transaction will be settled with Pioneer shares. The deal needs support of 75 percent of KWV’s shareholders.

“That 12 rand is not an offer,” Danie de Wet, a former KWV chairman and one of its top 20 shareholders, said in an interview from Robertson, Western Cape. “It’s unacceptable.”

KWV’s shares trade through brokers and last sold for 12.40 rand, according to the company’s website.

It’s a “fair price,” Zeder Investments Ltd. Chief Executive Officer Antonie Jacobs said. Zeder owns about 36 percent of KWV and about 42 percent of Kaap Agri Ltd., an agricultural-services company that owns 28 percent of Pioneer. “I must still take it to my committee and there must still be a circular but that is my personal view.”

‘Means Nothing’

PSG Group Services Ltd. holds 41 percent of Zeder. PSG Chief Executive Officer Jannie Mouton is a board member of Zeder, Pioneer and KWV. KWV Chairman Thys du Toit is also the managing director of KWV shareholder Rootstock Investment Management and sits on the board of Pioneer and PSG Group.

“If it’s acceptable to Zeder it means nothing because the majority shareholder in Pioneer is the majority shareholder or Zeder,” said De Wet.

The board of KWV “is acting in the best interest of all its stakeholders,” Du Toit said in a statement posted on its website. “A fair and transparent process, that adheres to the best corporate governance practices, is the best way to ensure that all stakeholders will be considered.”

To contact the reporter on this story: Nicky Smith in Johannesburg at nsmith38@bloomberg.net

To contact the editor responsible for this story: Vidya Root at vroot@bloomberg.net

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