Activists demonstrate outside the Belair Hotel in Luxembourg during Socfin0s May 2019 annual general meeting (Photo: FIAN Belgium)
(loose translation by GRAIN from the original)
Socfin : Bolloré and Fabri want to be the only masters on board
by Fabien Grasser
Belgian businessman Hubert Fabri and Vincent Bolloré's group want to take total control of Socfin by acquiring all the shares in the Luxembourg multinational, which is regularly accused of human rights violations. Minority shareholders are opposed to the operation, believing that the price proposed for the purchase of their shares is undervalued. They have referred the matter to the Financial Sector Supervisory Commission.
Socfin's Board of Directors was careful not to dwell on its plans at the Annual General Meeting on 30 May. However, on the same day, the Luxembourg multinational, which specialises in growing oil palm and rubber trees, issued a press release announcing an agreement between its two majority shareholders, the Belgian family group Fabri (55.38%) and the French group Bolloré (39.75%), giving Afico, a third-party company, 95.13% of the capital and the associated voting rights. As a result, the two majority shareholders have decided to implement a squeeze-out procedure for the minority shareholders, who hold a total of 689,337 shares. In other words, the Fabri and Bolloré groups are forcing the minority shareholders to sell them the remaining 4.87% of the capital, under the so-called "buy-out" law of 2012.
The law authorises this operation if the majority shareholder holds at least 95% of a company's shares. The price at which the shares are bought back must be determined on the basis of a report drawn up by an independent expert. The procedure must also be notified to and authorised by the Commission de Surveillance du Secteur Financier (CSSF), and minority shareholders may object.
In the case of Socfin, Afico called in BHB & Partners, a specialist firm based in Luxembourg, which set the buyback price at €30.85 per share, i.e. 50% more than its listing on the Luxembourg Stock Exchange at the time the deal was announced. Buying back the shares held by minority shareholders will cost the Fabri and Bolloré groups just under €21 million. But for many minority shareholders, this is not the end of the story, as they consider the price offered for their shares to be undervalued, in particular contesting the negative valuation of certain African plantations which they claim to be profitable.
The business is more profitable than ever
The holding company has 37 subsidiaries in Africa, Asia and Europe and, according to its website, employs 52,000 people. In recent years, it has seen its profits soar, taking advantage of the health crisis, the war in Ukraine - a major producer of edible oil - and galloping inflation: in 2022, Socfin was expected to make a profit of 164 million euros, compared with 29 million in 2020. The business is therefore proving to be more profitable than ever, hence the dissatisfaction of minority shareholders who have notified the CSSF of their opposition. Luxembourg's financial watchdog must now give its approval to the "buyout" procedure initiated by the groups owned by Belgian businessman Hubert Fabri and French billionaire Vincent Bolloré. "In the event of an objection, the law allows the CSSF to request the appointment of a second expert on the basis of the reasons given in the objection(s)", the financial centre's supervisory body told woxx.
So far, the case has gone unnoticed in Luxembourg, but it has provoked reactions in Belgium, where many minority shareholders reside. In recent weeks, it has been the subject of critical articles in the business daily "L'Echo", which sides with the opponents, and more moderate articles in the Dutch-language daily "De Tijd", which considers that "the public buy-out offer, with its high premium of 50.7% compared with the share price before the offer was made public, represents an exit opportunity for holders of a thinly traded share". When questioned by woxx, Socfin stated in an email exchange that its Board of Directors "expressed its opinion on the fair price as it results from the valuation work carried out by the independent expert".
The objections notified to the CSSF represent a first victory for the minority shareholders, as the "buy-out" operation could not be finalised by 25 August, the date initially planned by Afico, the new majority shareholder. The number of objections lodged with the CSSF was not disclosed to us, but the objectors included Florence Kroff of the Belgian NGO Fian, who had acquired a share in order to gain access to the holding company's annual general meetings.
Socfin will no longer be listed on the stock exchange...
"We are trying to understand the agreement, which apparently concerns a temporary transfer of 20 years of voting rights held by Bolloré to Hubert Fabri. But the Bolloré group retains its shares and will continue to receive dividends. In addition, the agreement stipulates that the Board of Directors will henceforth comprise one representative of the Fabri group and two representatives of the Bolloré group. This is a theoretical construct", says Florence Kroff.
Socfin has for many years been under fire from civil society, which accuses it of violating the human and environmental rights of the people living near its plantations, in particular accusing it of land grabbing. To make their voices heard by shareholders, members of Belgian and Luxembourg NGOs had acquired shares enabling them to relay the demands of plantation residents at the company's general meetings, leading to an annual demonstration in front of the Parc Belair hotel where the meetings are held. Socfin is not happy about these disruptions, and has taken legal action against several members of NGOs, including Fian in Belgium and SOS Faim in Luxembourg.
Vincent Bolloré, who is concentrating on building a far-right media empire in France, has in recent years gradually withdrawn from his historic investments in Africa, such as logistics. He established a foothold on the continent in the 1980s and laid the foundations for his fortune, now valued at €8.8 billion by Forbes magazine. But Socfin is different, as the Breton financier will remain a major shareholder, with the agreement notified on 30 May providing at most for a possible transfer of 5% of his shares to Hubert Fabri.
The NGOs are also questioning the purpose of the manoeuvre: "According to the specialists we spoke to, this is primarily a financial move, because the shares seem to be undervalued in relation to their real value," argues the Fian coordinator. "Some subsidiaries are negatively valued even though they all seem to be prospering. They appear to be loss-making, but we suspect that accounting games are being played between different subsidiaries to arrive at these results."
If the operation is completed, Socfin will no longer be listed on the stock exchange and "it also allows them to avoid a certain number of transparency obligations", explains Florence Kroff. In short, it's a way of flying under the radar to get rid of Socfin's bad reputation, a negative image that reflects on its famous shareholder Vincent Bolloré. "The work of the NGOs was probably a factor in this decision," Florence Kroff believes.
... Socfinaf and Socfinasia remain on the stock exchange
woxx turned to Afico, Socfin's new majority shareholder, to find out the economic reasons behind the total takeover by Hubert Fabri and Vincent Bolloré. But in the end it was Socfin that gave us the answer, referring the question to... Afico: "We are not in a position to answer these questions as the target company and not the initiator of the operation." Socfin and Afico share the same premises at 4, avenue Guillaume in Luxembourg, as well as the same telephone number. However, in its responses to our questions, Socfin made it clear that the transaction does not involve the Luxembourg multinational's two main subsidiaries, Socfinaf and Socfinasia, which are also domiciled in the Grand Duchy, where they will continue to be listed on the Luxembourg Stock Exchange.
In addition to the price offered for the shares by Fabri and Bolloré, minority shareholders are also contesting the way in which they learned of the "buy-out" operation, namely the publication of press releases on the Socfin and Luxembourg Stock Exchange websites. "I thought I would be informed by a letter sent to my home address," says Florence Kroff of the NGO Fian. "Although I personally hold one share in Socfin and one share in Socfinaf, I did not receive any communication from the company informing me personally of its intention to exercise a right of withdrawal and of the proposed price," she wrote in her letter of objection to the CSSF.
The CSSF will have the last word on the matter, and its verdict is expected by 30 September at the latest. Socfin's notification to the CSSF on 30 May of the implementation of the "buy-back" procedure is only the thirty-fifth of its kind since the law was passed in July 2012. It was widely used in the early years, but since 2015 only two companies have made use of it: Quilvest in 2018 and Socfin this year. The CSSF acknowledges that "there are not many squeeze-out procedures pursued under the law." In any case, their existence has not escaped Hubert Fabri and Vincent Bolloré.