After a month of speculation and formal announcements, Mitchell’s Fruit Farms Limited has declared the termination of discussions between its two major shareholders, Syeda Maimanat Mohsin and Syeda Matanat Ghaffar, and CCL Holdings (Pvt.) Limited regarding the sale of their combined 40.63% stake. The disclosure concludes a chapter of heightened interest in Mitchell’s, a company that has seen significant corporate developments over the years.
This development comes hardly a month after Mitchell’s Fruit Farms revealed that the two major shareholders were exploring strategic options for their holdings, including the possibility of a complete divestment. To facilitate this process, a data room was established for potential buyers to conduct due diligence.
On the same day, CCL Holding (Pvt.) Limited, through Arif Habib Limited as the Manager to the Offer, submitted a Public Announcement of Intention (PAI) to the Pakistan Stock Exchange (PSX) to acquire voting shares of Mitchell’s and gain control of the company. The acquisition plan targeted the 40.63% stake held by the two shareholders, with a public offer proposed for an additional 50% of the remaining shares (~30%).
A History of Complex Challenges
Mitchell’s has faced a turbulent financial history over the last decade. While historically profitable, the company reported its first loss in 2016, marking the start of a downward trend. By 2020, accumulated losses reached approximately Rs 14 billion.
Unsurprisingly, the latest episode was not Mitchell’s first attempt to sell. Mitchell’s has previously made attempts to sell itself in 2019, engaging with bidders like Bioexyte Foods and Waves Singer Pakistan. Negotiations extended into 2020 but ultimately fell through as terms did not align with management’s expectations.
With almost 20% of the shares divided between the three children of the late Syed Muhammad Mohsin, it was the two daughters, Maimanat (Jugnu Mohsin) and Matanat (Moni Mohsin) that decided to sell their share of the company. It is also important to note that the respective husbands of both the daughters, namely Najam Sethi and Shahzad Ghaffar are currently at the helm of the company as CEO and Chairperson respectively.
Under the leadership of Najam Sethi, appointed as chairman and later CEO, Mitchell’s has embarked on a comprehensive turnaround strategy in the last two years. A key component was a Rs 750 million equity injection through a rights issue. Financial restructuring and cost control began to show results, with a small profit recorded in 2021. Despite setbacks, including a record loss of Rs 620 million in 2022, Mitchell’s bounced back, posting a profit of Rs 460 million in 2024. Notably, Rs 370 million of this profit was derived from the sale of land.
The company’s improving financial health set the stage for renewed interest. Simultaneously, CCL Holdings, known for its portfolio in pharmaceuticals and food sectors, announced its intention to acquire voting shares and control of Mitchell’s. CCL’s proposed transaction was contingent upon regulatory approvals and included a public offer for an additional 29.68% of shares to comply with takeover regulations.
Despite the optimism surrounding the talks, discussions between Mitchell’s shareholders and CCL Holdings have now ended without resolution. The reasons for the breakdown have not been disclosed, but the complexities surrounding Mitchell’s go beyond financial fundamentals. A valuation mismatch and strategic disagreements are the most likely contributors.
To sell or not to sell?
Mitchell’s share price has been highly sensitive to operational and corporate developments. From a high of Rs 900 during its profitable years, it plummeted to Rs 70 amid peak losses in 2022. However, recent recovery efforts and speculation about the sale pushed the price close to Rs 200. While the cessation of talks may introduce short-term volatility, Mitchell’s improving financials suggest long-term investor confidence.
After today’s announcement, the company’s price has plummeted, despite the ongoing historic rally at the PSX, marking a decrease of almost 5% during a single day’s trade at the end of Monday’s trading session.
Mitchell’s now faces a critical juncture. With improved financial stability and brand equity, the company remains an attractive proposition for future bidders. However, sustaining operational profitability will be key to maintaining its allure in the market.
Moreover, the owners’ position on wanting to sell the company, remains wayward for now. For shareholders, the focus could shift to strategic clarity because for-sale or not, Mitchell’s continues to explore paths for value maximisation.
