Zeder Investments CEO Norman Celliers
Zeder Investments CEO Norman Celliers

Agribusiness conglomerate Zeder Investments says the companies under its control are open to making acquisitions because some of their competitors are being revaluated.

Zeder, which has substantial stakes in listed food businesses, has seen several of its own holdings drop in value over the past year as investors grew weary of companies that are consumer focused.

Its 27% holding in Pioneer Foods is valued at R4.92bn, down from the R7.66bn it was priced at in February 2018. Its 41.1% share of Kaap Agri is now worth R968m, after it fell from R1.37bn.

Zeder, which is controlled by investment group PSG, increased its overall holding in Quantum Foods from 27.7% to 29.3% over the same period but its overall valuation in this business had fallen from R246m to R234m.

Its annual results to end-February showed that the sum-of-the-parts (SOTP) value per share, a method used to evaluate a conglomerate to determine what its aggregate divisions would be worth if they were to be disposed of, had fallen from R6.23 at the start of October to R5.79 at April 15. Its current SOTP is also sharply down on the R7.85 it was at on February 28 2018.

Though the valuations of its own businesses are under pressure, so are those of many of the companies that operate in the same space. Zeder CEO Norman Celliers said this creates acquisition opportunities because many of these companies, which were once considered too expensive for its businesses to buy, are now being revalued by the group.

Its openness to making acquisitions can also be seen in its decision to invest an additional R341.3m into Zaad, an agri-input firm, which has holdings in companies that specialise in seed production, plant nutrition and agrichemicals.

Zeder said in its 2018 annual report that the additional investment, which brought its total holding in Zaad to R2.23bn, would be used to fund further acquisitions, as well as for research and development.

Celliers said aside from opening up acquisition opportunities, the sluggish economy has also seen it searching the balance sheets of its businesses for what he called “lazy assets”. This led to the disposal of underperforming operations and to unbundle undervalued businesses.

Zeder CEO Norman Celliers talks to Business Day TV about the company’s full-year results

This resulted in Capespan, in which it has a 97.4% holding, unbundling its logistics unit into a separate company, The Logistics Group (TLG), now also directly owned by Zeder.  

The split meant Capespan would focus on its core business activities such as the production, procurement, distribution and marketing of fresh produce and TLG would continue to operate its existing strategic logistical and terminal assets.

During the year, Capespan had sold off its 9.23% stake in Joy Wing Mau, one of China’s largest fruit distributors, for almost R1.2bn.

Though there has been a drop in valuation of its listed assets, Celliers still has faith in them, saying Pioneer Foods, in particular, is still a strong company. Even so, he was uncommitted on if it would increase its holding in the group.

Despite the fall in its valuation, Zeder produced flat earnings for the period with earnings per share almost unmoved at 27.7c.

Its final dividend was unchanged at 11c a share.

claasenl@businesslive.co.za