Public offer: Michelin, SIFCA looking to wholly acquire rubber producer SIPH

Acting in concert with Ivory Coast-based company SIFCA, Michelin has opened a simplified cash public tender offer through its 99.99 per cent-owned subsidiary Compagnie Financière Michelin SCmA (CFM) to acquire the 841,285 shares in natural rubber company Société Internationale de Plantations d’Hévéas (SIPH) not currently held by the two parties. Michelin states that it and SIFCA will pay 85 euros for each share in the West Africa-based rubber producer and marketer.

The primary aim of the friendly offer, comments Michelin, is to enable CFM and SIFCA to “strengthen their ties and raise their stake in SIPH’s capital in light of the increasingly important role that West Africa is playing in global natural rubber production against a backdrop of intensified competition between the players in these markets.”

The two companies already hold a sizable stake in SIPH. As of 19 June, CFM held 27.78 per cent of SIPH’s capital and SIFCA 55.59 per cent – 83.38 per cent in concert. CFM and SIFCA respectively held at least 27.58 per cent and 62.89 per cent of the voting rights as of this date, or 90.47 per cent in concert. Following the public offer, and if the requisite conditions are met, CFM will request a squeeze-out of any remaining minority SIPH shareholders.

The proposed offer price would give rise to a 41.8 per cent premium on the last closing SIPH share price prior to the filing date (5 June 2017) and a premium of 49.6 per cent and 57.8 per cent versus the volume weighted average SIPH share price over the previous 60 and 250 trading days, respectively.

On 6 June 2017, the SIPH Board of Directors unanimously decided to issue a favourable opinion on the draft simplified public offer, which it believes is aligned with the interests of the company, its shareholders and its employees, and recommends that SIPH shareholders tender their shares to the offer.

Growth to 400,000 tonnes planned

SIPH manages over 40,000 hectares of mature rubber trees in Ivory Coast, Ghana, Nigeria and Liberia, and also purchases rubber latex from independent growers. Around 70 per cent of all rubber latex processed is sourced in the Ivory Coast, where SIPH has historically been most active. The latex SIPH processes into rubber is primarily sold within the tyre industry and mainly in Europe; SIPH states that its main clients are “the big companies in the tyre industry.”

The company’s turnover from rubber in 2016 was 249.4 million euros, up 10.8 per cent on the year before. Rubber tonnage produced by SIPH last year totalled 217,900 tonnes, 13.8 per cent more than in 2015, and its sales of rubber rose 18.3 per cent to 217,100 tonnes. In its 2016 annual results, SIPH stated an anticipation that its output will grow to between 230,000 and 240,000 tonnes this year, and it expects output to reach 400,000 tonnes by 2025 thanks to efforts to regenerate and expand its plantations and above all through increasing purchases of rubber from outside producers. Of the forecast 400,000 tonnes, one-third is expected to be SIPH’s own production and the remainder purchased rubber.

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