8 months ago
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GK Investments Limited, a member of the GraceKennedy food and financial services conglomerate, has increased its shareholding in Spur Tree Spices Jamaica Limited to one-fifth, positioning it as the second-largest owner of the spice maker, based on the most recent disclosures.
GK Investments’ stake has increased to just over 20.18 per cent, GraceKennedy said in a market filing. The additional stake resulted from the recent purchase of 60 million more Spur Tree shares.
With the acquisition, GK Investments surpassed the 15.5 per cent stake held by CEO Albert Bailey up to December 2023. The founder Harrinarine Mohan Jagnarine held 31 per cent of the shares at that time.
It wasn’t immediately clear who sold the shares to GK Investments, but even if the seller were Jagnarine alone, he would still hold the largest block of shares, assuming nothing else changes.
Based on the number of shares in issue, the 20.18 per cent stake held by GK Investments amounts to more than 338 million units of Spur Tree that are now valued at $842 million. That estimate is based on the $2.49 closing price of the stock on Thursday. Up to December, GK’s ownership was 13.69 per cent.
Surpassing the 20 per cent ownership level allows GK to categorise the investment as an associate company and to nominate its own representative to the seven-member board.
“Yes, we will have a seat on the board; and yes, we will consolidate Spur Tree as an associated company,” said Group CEO of GraceKennedy Limited Don Wehby on Thursday.
He added that the purchase was a strategic acquisition for the group.
GraceKennedy is a $220-billion conglomerate with a massive food portfolio, which includes the production of spices. GK Investments, which is part of the financial arm of the conglomerate, was initially a backer of Spur Trees Spices through a $100-million convertible loan that was swapped for shares in the spice maker when it went public via an IPO in 2022.
GraceKennedy’s food and food trading operations generated revenue of $113 billion last year. Spur Tree Spices achieved sales preliminarily estimated at $1.46 billion in the same period, up by more than 40 per cent from $1 billion in 2022, having experienced “high demand” for its products in local and overseas markets, the company said. However, its net profit dipped to $88 million from $115 million, due to raw material shortages and price hikes.
“The local farming sector was seriously impacted by a prolonged drought during the first six months of 2023, followed by excessive heavy rainfall that virtually wiped out the crops that our business depends on. The industry is yet to recover from the impact of these events, and this has prompted the company to explore alternative avenues for the supply of these critical ingredients,” Spur Tree said in a statement released with its earnings report.
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