Kenya’s Capital Markets Authority (CMA) has forced Luxembourg-based private equity firm CVC Capital Partners to buy out minority shareholders in Limuru Tea, a Kenyan company engaged in green leaf tea cultivation, including Kenyan businessman Joe Wanjui.
The CMA’s recent action coincides with plans to resolve the ongoing litigation case that has clouded Limuru Tea’s future, with Wanjui and other minority shareholders at odds with British multinational consumer goods company Unilever Plc for selling its 52-percent stake in the Kenyan agro-allied firm to CVC Capital Partners in a deal worth Ksh596.7 million ($5.1 million).
The move comes nearly three weeks after Wanjui filed a lawsuit to prevent Unilever from selling its 52-percent stake in Limuru Tea as part of a coordinated effort to prevent CVC Capital Partners from attempting a takeover of the agro-allied firm.
Wanjui, who owns 25.48 percent of the agro-allied company, accused the multinational of rejecting their offer to buy the remaining 52 percent and instead selling the shares to CVC Capital Partners.
Wanjui went on to say that CVC Capital Partners’ interests are not aligned with Limuru Tea’s, and that Unilever made partial disclosures to the CMA during the multinational’s phased restructuring of its tea business, which culminated in the sale.
In response to his legal actions, the regulator refused to exempt CVC Capital Partners from making a takeover offer to minority shareholders following its acquisition of a majority stake in Limuru Tea from Unilever.
“Although it is indicated that granting the exemption would serve the interests of shareholders, the authority has received complaints from some shareholders opposed to the current structure.” “In view of the foregoing, the authority is not in a position to grant the exemption sought,” CMA CEO Wycliffe Shamiah said.
The refusal to grant the exemption is unusual in Kenyan mergers and acquisitions, but not uncommon in Western capital markets, where listing rules and regulations require investors who buy more than 25 percent of a company directly or indirectly to make a takeover offer to the remaining shareholders.
They can only seek CMA exemption if the acquired firm is in financial distress, the stake purchased was used as security for a bank loan, or there is a strategic need to retain a domestic shareholding.
Wanjui was a central figure during former Kenyan President Mwai Kibaki’s administration. He is a business magnate, presidential advisor, and philanthropist with interests in hospitality, insurance, real estate, equity, agribusiness, and horticulture.
His well-diversified portfolio of assets includes Hillpark Hotels, UAP-Old Mutual, Bawan Roses, and his 25.48 percent stake in Limuru Tea, which is currently valued at Ksh195.7 million ($1.66 million).
