George Steuarts makes a Rs. 3.50 per share offer for HVA Foods

George Steuart and Co. (GS), established in 1835, has made a voluntary offer to shareholders of tea exporter, HVA Foods PLC, to acquire all shares of that company at a price of Rs. 3.50 per share under the SEC’s Takeovers and Mergers Code.

This followed a deal between GS and HVA Lanka (Exports) Private Ltd., the controlling shareholder of HVA Foods, to purchase 51.1% of that company at the Rs. 3.50 price in a deal worth Rs. 118.65 million.

The holding company is selling down its 61.1% stake in HVA Exports and the offeror (GS) has offered to buy all shares in that company. They have said their offer is based on the majority shareholder’s agreement to accept the offer in respect of a controlling 51.1% of the company.

HVA shareholders have been told that once controlling interest is acquired the voluntary offer made to all shareholders will convert to a mandatory offer in terms of the SEC’s Code.

HVA has not published its annual report for the year ended Mar. 31, 2020. In a Stock Exchange filing made of Dec. 23, the directors said that the audit for the last financial year was could not be completed in time because of the difficulties that have arisen from of absence of staff unable to attend work on account of Covid 19 restrictions.

There was no disclosure on when the annual report could be expected but the directors drew attention to the fact that previous quarterly statements had been published on time and said that action will be taken to complete the audit as soon as possible.

According to the last published annual report for the year ended Mar. 31, 2019, there were group retained losses of Rs. 511.1 million on the balance sheet and the company incurred a loss of Rs. 367 million in that year.

In the last five years to 2019 a profit was earned only in 2018 when a profit of Rs. 44.1 million was published. The last annual report (for 2019) placed the net asset value of the company’s share at 91 cents.

The directors of HVA are Messrs. Rohan Fernando (chairman), Ms. Varuni Amunugama Fernando (non-executive), BSM de Silva (Independent non-executive) and D. Hettiarachchi (Independent non-executive)

The offeror, George Steuarts, originally an agency house managing plantations, is now into manifold activities including pharmaceutical import and distribution, tea, insurance broking and consultancy services, money broking, financial consultancy, travel, leisure, hotels (operates three hotels) and many more.

Mr. Dilith Jayaweera heads the group. He’s into television (Derana) and newspapers in addition to its other interests.

“The HVA share has move up from a range of three rupees plus to six rupees plus since the takeover news broke. The Rs. 3.50 offer price is below the ruling market price of six rupees plus so that it would be advantageous for shareholders to sell in the market than take up the offer,” a broker said.