American takeover of Limuru Tea upended by shareholder wrangling
American takeover of Limuru Tea upended by shareholder wrangling
American company CVC Capital Partners’ bid to assume the running of Limuru Tea now hangs in the balance after the Capital Markets Authority disallowed a transaction to that end.
The market regulator turned down an offer by the US company seeking to gulp down Limuru Tea’s minority shareholders, including business magnate Joe Wanjui.
The latter, alongside his contemporary, Wainaina Kinyanjui, moved to court seeking to slam the brake on British multinational Unilever for a planned sale of its 52 percent stake in Limuru Tea to CVC Capital Partners.
In court papers, the petitioners are arguing that the British company repelled their offer to snap up the stake in the Nairobi Securities Exchange listed company.
The CMA is set to sanction the US firm’s endeavor after completing an inquest into London-headquartered Unilever dealings at Limuru Tea amid allegations that the latter’s 700-acre plantation has been grossly undervalued.
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The investigation comes in the wake of a Limuru Tea minority shareholder petition, which indicted the company for valuing its land at Kes1 million per acre instead of a fairer Kes23 million.
Limuru Tea is also accused of downsizing its earnings and playing for time in collecting tea sales from Unilever.
Mr Wanjui and Mr Kinyanjui have accused Unilever of disingenuous trade practices, chief among them, overcharging Limuru Tea for the supply of green leaf.
The petitioners claim that the British multinational is the exclusive buyer of tea produce from Limuru Tea, which it does at reduced prices. Additionally, the minority shareholders allege that Unilever supplies inputs such as fertilizer at extortionate prices.
Mr Wanjui and Kinyanjui are of the view that the overbearing influence Unilever exerts on Limuru Tea has injured the company’s sales and profits.
The Kenyan tea company posted a Kes 9.6 million in the financial year to December 2021, a spike from the Kes 3.7 million loss suffered in 2020.
Unilever will now have to wait for the completion of the aforementioned investigations into its activities at Limuru Tea before CVC Capital Partners can assume operations.
