Kenyan Court Halts Takeover of REA Vipingo After Bid Challenged

Kenya’s High Court halted the takeover of REA Vipingo Plantations Ltd. after one of the bidders for Africa’s biggest sisal producer challenged the validity of a rival offer.

The court order was issued yesterday pending a May 26 hearing on Centum Investment Co.’s application to the Capital Market Tribunal to set aside the Capital Markets Authority’s acceptance of a bid submitted by REA Trading Ltd., according to documents obtained at the court in the capital, Nairobi, today. Centum took its case to the High Court because the tribunal doesn’t have a quorum to hear the company’s appeal, said Centum Corporate Affairs Director Fred Murimi.

Centum, which is also bidding to buy REA Vipingo, says that REA Trading’s offer violates domestic takeover laws, according to documents obtained by Bloomberg and verified by the tribunal. REA Trading’s offer is “fictitious” because it’s dependent on conditions that haven’t been fulfilled yet, Murimi said yesterday.

REA Trading, based in London, on March 3 raised by 75 percent its bid for the 43 percent of REA Vipingo it doesn’t already own. The company also said shareholders who accept its offer of 70 shillings (80 cents) a share would be entitled to a pro-rata share of dividends or distributions of proceeds from future sale of land for as much as 15 shillings per share. Centum is offering 75 shillings.

Offer ‘Contingency’

Centum argues that REA Trading’s offer contains a “contingency” that violates Kenya’s Companies Act, according to the appeal submitted to the tribunal. REA Trading will pay the dividends or distribution if the land is sold before December 2018 and the proceeds are in excess of 175,000 shillings, the document shows.

REA Trading director Jeremy Robinow didn’t respond to three e-mailed requests for comment sent yesterday and today. Neither he nor Richard Robinow, the company’s chairman, was available for comment when Bloomberg called its London office today, following two calls yesterday.

REA Vipingo was suspended from trading on the Nairobi Securities Exchange in November after REA Trading made an initial cash offer to acquire the company. The stock was suspended from trading on the Nairobi Securities Exchange on Nov. 13 at 27.50 shillings, giving the company a market value of 1.65 billion shillings.

Vania Investment Pool Ltd., a closely held Kenyan company, offered 80 shillings a share to buy Rea Vipingo, before its offer was rejected by the Capital Markets Authority for missing a Feb. 28 deadline. Vania has asked the Court of Appeal to overturn an April 17 High Court ruling that upheld the regulator’s rejection of its offer.

REA Vipingo operates two sisal estates in Kenya that produce about 12,000 metric tons a year of the fiber, which is used to make rope and dartboards. Three estates in Tanzania produce more than 7,500 tons, according to the company’s website.

To contact the reporter on this story: Charles Wachira in Nairobi at cwachira@bloomberg.net

To contact the editors responsible for this story: Antony Sguazzin at asguazzin@bloomberg.net Paul Richardson, Karl Maier

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