Picture: REUTERS
Picture: REUTERS

Agribusiness-focused Zeder Investments said on Tuesday that it may return as much as  R4.75bn to shareholders, which amounts to more than half its market capitalisation, after its planned disposal of Pioneer Foods.

Trading conditions in the food and agricultural sector remain tough, however, with the company expecting subdued value growth in the rest of its financial year.

Headline earnings per share (HEPS) fell 92% to 2.4c in its six months to end-August, largely as a result of an upward fair-value investment in Joy Wing Mau in the prior comparative period.

Zeder’s subsidiary Capespan disposed of its 9.23% interest in Joy Wing Mau, one of China’s largest fruit distributors, for almost R1.2bn in September 2018.

From an earnings point of view, the interim reporting period traditionally represents the lesser half of earnings, the company said, as the period reflects the annual input-cost cycle associated with many of its agriculture investments, as well as the softer half of the annual consumer sales and spending cycles.

Despite these seasonal variances, recurring HEPS decreased 63% to 3.6c compared to the prior corresponding period, the company said. Net asset value per share fell 4.3% to 481.1c. The company’s sum-of-the-parts value per share rose 11% to R6.25.

The group, which owns 28.6% of Pioneer Foods and 41.1% of Kaap Agri, said it would use the cash from its disposal of Pioneer Foods to return cash to shareholders, and may up its stakes in its existing portfolio. It would also consider new acquisitions, the statement read.

Its Pioneer Foods investment is its largest, representing 51.2% of its R12bn portfolio.

In July, the company said it had received an all-cash offer of about R6.4bn for 100% of Pioneer Foods by PepsiCo, with the offer, at the time, representing about a 56.5% premium to Pioneer Food’s share price.

Zeder said on Tuesday that it may be able to distribute between R4.25bn and R4.75bn to shareholders, with the distribution still being considered by its directors. It would also be subject to the timing of the transaction.

At 1.30pm on Tuesday, Zeder’s share price was up 1.31% to R4.63, having risen 3.58% so far in 2019. The company has a market capitalisation of just less than R8bn.

The company’s share price has risen 16.6% since the announcement of PepsiCo’s offer.