ISLAMABAD: The effort to sell Mitchell’s Fruit Farms is going ahead full throttle. After the company announced it was entering talks with pharmaceutical company CCL Limited, it has chosen to begin talks with IGI Investments, which is a subsidiary of the IGI Holding Company that belongs to the Packages Group.
If the company is sold to the Packages Group through IGI, it will essentially mean the Mohsin family which owns Mitchell’s will be selling the company to their maternal cousins.
Mitchell’s, founded by Francis J Mitchell before partition, was sold to Syed Maratib Ali in 1958. The late Syed Maratib Ali was buying the company for his son-in-law S M Mohsin, who has been running it with his family for nearly 70 years now. The Packages Group is owned by Syed Babar Ali, the son of Syed Maratib Ali and the founder of LUMS.
An uphill battle
The Mohsin family has been trying to sell Mitchell’s since as early as 2019. Back then, talks were going on between Bioexyte and Waves Singer Pakistan to take over more than 30% voting shares of the company acting as separate acquirers. In the beginning of 2020, the pandemic meant the company took a huge hit, and soon Bioexyte was left standing as the lone bidder. As terms could not be agreed upon, the deal fell through. When the sale could not be carried out, the company looked to bring its house in order and make the company attractive for a future sale bid to be carried out. The board appointed Najam Sethi as the chairman of the board.
However, there was a need to carry out a change at the company as its financial performance was a shadow of its former glory. Before 2016, the company was registering consistent profits which took a turn for the worse after 2016. The company started to see losses and by 2020, the equity of the company had shrunk due to accumulated losses.
Once it was finalized that the company would not get beneficial terms, the company started to inject new equity at the company and changed their leadership at the board. With the arrival of Sethi came the appointment of Naila Bhatti as the new Chief Executive Officer. The change led to a small profit in 2021, however, 2022 was the worst year in its history.
Why is the sale happening now?
Well, last year it seems the Sethi led management tried to make the company a more attractive buy.
Seeing the situation getting worse, Sethi took over as the new CEO. The performance of the company did see improvement in 2023 and 2024 due to efforts carried out in terms of bringing down the cost of production, but mostly by selling off some of the land that the company owned.
With better performance, it seems that there was a renewed interest in Mitchell’s.
The latest drive to sell control in the company started on 11th of November when the board announced that a strategic review of investment was being carried out. In simple terms, two of its biggest shareholders were looking to divest or sell their shares. Collectively, Syeda Mainmanat Mohsin and Syeda Matanat Ghaffar hold 40.63% of the issued capital and they were considering an option to completely sell their shares.
Initially, interest came from CCL Holdings (Pvt) Limited which announced that they were carrying out the necessary due diligence before making a bid. CCL Holdings is a company which is involved in manufacturing and marketing of pharmaceutical and health products. The company also has Wholesun (Private) Limited in its portfolio of companies which are involved in the market of food products which can benefit from this acquisition.
By 9th of December, it was announced that the negotiations carried out between the two shareholders and CCL Holdings had ended without a result and that no deal had been finalized between the two parties.
The reason for the deal breaking down could only be guessed at the time, but on 12th of December it was announced that IGI Investments was interested in buying the shares.
IGI Investments is a wholly owned subsidiary of IGI Holdings which is part of the Packages Group company. The company acts as a holding company which invests, acquires, sells and holds securities and companies under one roof. The company has subsidiaries like IGI Finex Securities, IGI General Insurance, IGI FSI (Private) Limited, IGI Life Insurance and IGI Investments.
IGI Investments is now carrying out their own due diligence for a potential transaction to be carried out. It already owns 3.72% of the shares of the company and will end up taking its ownership to 44.35% once it takes over the shares of the interested shareholders.
Under section 111 of the Securities Act 2015, IGI will have to make a public offer of 27.83% of the remaining shares which can potentially take its total shareholding to 72.18%.
It seems that Sethi has been pursuing bids from the market on an active basis. The negotiations back in 2019 and now show that there is a move to sell the company to the highest bidder specially when the company has finally turned profitable in the last year. The bid by CCL Holdings and now IGI Investments is evidence that there are talks going on to get the best price possible in the market.
All in the family
The deal being brokered between IGI and Mitchell’s feels like a homecoming of sorts. Mitchell’s used to be owned by Syed Maratib Ali in 1958. This was the same time when two of his sons, Syed Babar Ali and Syed Wajid Ali took control of their own businesses. Packages started manufacturing and sale of packaging materials headed by Syed Babar Ali while Treet was already producing razor blades. Mitchell’s was handed by Syed Maratib Ali to his son in law named Syed M Mohsin.
As time passed, S M Mohsin passed Mitchell’s to his children who ended up owning a huge chunk of the company. The Packages group grew in size and established the IGI Holdings as the leadership of the company was passed to Syed Hyder Ali. Now it seems that Packages group is looking to takeover Mitchell’s by buying the shares that had been passed down to the family of S M Mohsin.
The details of any deal will be hashed out over time and any progress in this regard will be communicated to the market accordingly. For now it seems that there is a renewed interest in Mitchell’s and Sethi is looking to succeed where he failed last time.
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