Zeder investors in line for big payout


Zeder investors in line for big payout

Published Date: 2019-10-09 | Source: Stephen Gunnion | Author: Stephen Gunnion

Zeder investors in line for big payout

The investment company says it will distribute up to R4.75 billion to shareholders if the PepsiCo takeover of Pioneer Foods proceeds.

Zeder Investments says it will return capital to shareholders and invest in new opportunities if the sale of its stake in Pioneer Foods goes through. The investment holding company has agreed to support US food and beverage giant PepsiCo's R24.4 billion bid for Pioneer. Zeder's stake is worth R6.4 billion.

Releasing interim results, Zeder said the negative macroeconomic conditions that weighed on its performance in the six months to end-August were likely to remain unchanged in the short to medium term, but should improve over the longer term. As a result, it said earnings and valuations at both a group and portfolio level were expected to be subdued during the next reporting period.

A sharp increase in Pioneer's share price following July's announcement of PepsiCo's bid helped support Zeder's sum-of-the-parts valuation, which rose to R6.25 at the end of August from R5.64 in February. This was countered by a decline in the value of its investments in Capespan, Kaap Agri and Agrivision Africa. The SOTP is calculated using the quoted market prices for all its JSE-listed investments and internal valuations for unlisted holdings. Together with recurring HEPS, it uses the two as benchmarks to measure its performance.

Recurring headline earnings per share fell 63% over the period to 3.6c due to weaker performances from most of the companies its invested in following continued challenging trading conditions in the food and related business sector. Attributable earnings per share were just 5% lower at 25.8c due to the reversal of a non-headline impairment charge on its investment in Pioneer, which was recognised at the end of last year. The group only considers a dividend at the end of its financial year.

Zeder said if the PepsiCo deal proceeds, it should be able to distribute between R4.25 billion and R4.75 billion to shareholders. It said the distribution remained subject to the timing of the transaction and further evaluation of circumstances at the time. The remaining balance of the proceeds would be invested in new opportunities and in its existing underlying portfolio.

Its shares fell 0.4% to R4.55 yesterday.

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