After a month of speculation and official announcements, Mitchell’s Fruit Farms Limited has announced the end of discussions between its major shareholders, Syeda Maimana Mohsin and Syeda Matanath Ghaffar, and CCL Holdings (Pvt.) Limited with regard to the sale of their combined 40.63% stake. . This unveiling concludes a chapter of growing interest in Mitchell, a company that has witnessed significant corporate developments over the years.
The development comes almost a month after Mitchell’s Fruit Farms revealed that its two major shareholders were exploring strategic options for their holdings, including the possibility of a complete divestment. To facilitate this process, a data room has been created for potential buyers to conduct due diligence.
On the same day, CCL Holding (Pvt.) Limited, through Arif Habib Limited as Offer Manager, filed a Public Announcement of Intent (PAI) with the Pakistan Stock Exchange (PSX) to acquire voting shares in Mitchell and gain control. From the company. The takeover plan targeted the 40.63% stake held by the two shareholders, with a proposed public offer to acquire an additional 50% of the remaining shares (~30%).
A history of complex challenges
Mitchell has faced a troubled financial history over the past decade. Although historically profitable, the company reported its first loss in 2016, marking the beginning of a downtrend. By 2020, accumulated losses amounted to about 14 billion rupees.
Unsurprisingly, the latest episode wasn’t Mitchell’s first attempt at selling. Mitchell’s previously made attempts to sell itself in 2019, engaging suitors such as Bioexyte Foods and Waves Singer Pakistan. Negotiations extended into 2020 but ultimately failed because the terms did not match the administration’s expectations.
With nearly 20% of the shares divided between the three sons of the late Syed Muhammad Mohsin, daughters Maimanat (Jugno Mohsin) and Matanat (Moni Mohsin) have decided to sell their stake in the company. It is also important to note that the two daughters-in-law, Najam Sethi and Shahzad Ghaffar, are currently heading the company as CEO and Chairman respectively.
Under the leadership of Najam Sethi, who was appointed Chairman and later CEO, Mitchell’s has embarked on a comprehensive turnaround strategy in the last two years. The key component was an infusion of Rs 750 million of equity through a rights issue. Financial restructuring and cost control are starting to show results, with a small profit recorded in 2021. Despite setbacks, including a record loss of Rs 620 million in 2022, Mitchell’s company has bounced back, posting a profit of Rs 460 million in 2024. Notably, Rs 370 million of this profit came from the sale of land.
The company’s improving financial health paves the way for renewed interest. At the same time, CCL Holdings, known for its portfolio in the pharmaceutical and food sectors, announced its intention to acquire voting shares and control of Mitchell. CCL’s proposed transaction was conditional on regulatory approvals and included a public offer to acquire an additional 29.68% of the shares to comply with takeover regulations.
Despite the optimism surrounding the talks, discussions between Mitchell shareholders and CCL Holdings have now ended without a resolution. The reasons for the collapse were not revealed, but the complexities surrounding Mitchell’s departure go beyond financial fundamentals. Valuation mismatch and strategic disagreements are the most likely contributing factors.
To sell or not to sell?
Mitchell’s stock price has been highly sensitive to operational and corporate developments. From a high of Rs 900 during its profitable years, it fell to Rs 70 amid peak losses in 2022. However, recent recovery efforts and speculation about a sale have pushed the price to near Rs 200. With the volatility, Mitchell’s improving financial conditions indicate long-term investor confidence.
Following today’s announcement, the company’s price fell, despite the PSX’s continued historic rise, recording a decline of approximately 5% during one-day trading at the end of the trading session on Monday.
Mitchell now faces a critical juncture. With improved financial stability and brand value, the company remains an attractive proposition for future bidders. However, maintaining operational profitability will be key to maintaining its attractiveness in the market.
Furthermore, the owners’ position on whether they want to sell the company remains uncertain at the moment. For shareholders, the focus could shift to strategic clarity because whether to sell or not, Mitchell continues to explore paths to maximize value.