JSE-listed Omnia Holdings Limited (“Omnia”), announced that it has reached an agreement to dispose of Oro Agri to Rovensa, a European-headquartered business which produces and distributes biocontrol, bionutrition and crop protection solutions. This follows Omnia’s announcement in June that it had received a non-binding offer which warranted further investigation.
Seelan Gobalsamy, CEO of Omnia commented: “The Board undertook a comprehensive review of Oro Agri as part of the Group’s broader strategy and has concluded to accept Rovensa’s attractive offer and recommend that shareholders approve the transaction.”
In terms of the agreement, Rovensa’s offer is based on an enterprise value of USD165 million for Oro Agri which will translate into aggregate cash proceeds to Omnia of approximately USD152 million. Omnia acquired Oro Agri in 2018 for USD100 million. The price is reflective of Rovensa having synergies with Oro Agri that Omnia does not have as well as capacity to fully fund Oro Agri’s growth plan.
“We believe that Oro Agri’s risk profile, the attractive price offered by Rovensa and the opportunity to de-risk our capital structure, outweigh Oro Agri’s long term potential which would require significant investment to realise,”
Gobalsamy.
Post-disposal, Omnia will retain a far reaching international footprint with attractive opportunities for its Agriculture International and Mining International businesses (BME), which represent approximately 20% and 50% of Omnia’s international income respectively.
Omnia’s Agriculture International business is actively growing its biostimulant, speciality nutrient and organic fertiliser coating product ranges which, together with demand for humates from Omnia’s unique Australian source, remain high. Research on microbial and other speciality plant nutrition products in South Africa is ongoing.
“Our intention is to use the proceeds from the disposal to repay debt and position Omnia with a strong financial base from which to fund selective organic expansionary capex and working capital. We will remain conservative regarding capital allocation to value accretive non-organic opportunities,”
Gobalsamy
Omnia plans to review its dividend policy and this, together with decisions regarding the return of any surplus cash to shareholders, including through a special dividend and/or share buyback, will be announced with its results for the financial year ending March 2021.
The effective date of the disposal is 1 April 2020 and is subject to conditions customary for transactions of this nature including approval, by a simple majority, of shareholders at a general meeting on or about Monday, 14 December 2020. A circular is scheduled to be mailed to Omnia shareholders on or about Friday, 13 November.
Institutional shareholders representing a majority of the shares in issue currently have provided indications of support for the disposal.
