CAPITALWORKS TO BUY SOVEREIGN
Prudential Investment Managers is one of the major investors backing an offer for Sovereign Foods from private equity firm Capitalworks.
Capitalworks has emerged as Sovereign Foods’ white knight after rival poultry producer Country Bird last year tried to take over the company.
Country Bird has a stake of about 34% in Sovereign. The company’s CEO, Marthinus Stander, didn’t respond to questions sent to him via email on Friday.
Chris Wood, Prudential’s head of equity, said the investment manager was part of the 50.85% of shareholders supporting the Capitalworks offer.
“All things considered, Prudential has undertaken to support the CapitalWorks offer ... We will be recommending that they accept the price of R12 per share,” Wood said on Friday.
“Prudential did not support Country Bird’s hostile bid of R9 per share as, in our view, this represented a material undervaluation of the company. This latest bid proposes a 30% premium, which we consider more appropriate for our clients,” he said.
Sovereign said it had received a firm offer from a special-purpose vehicle controlled by Capitalworks to acquire a controlling interest in Sovereign Foods for a R907 million all-cash buy-out offer.
Capitalworks confirmed it had entered into an implementation agreement to make an offer to acquire control of Sovereign Foods.
“Capitalworks will ... provide further information once the transaction has become effective,” Capitalworks said.
“A key condition to the offer is that Capitalworks must acquire more than 50% of Sovereign Foods’ issued shares. To this end, Capitalworks announced upfront support from shareholders holding more than 50.8% of Sovereign Foods’ shares, demonstrating strong support for the offer,” Sovereign Foods said. “The offer comes at a 33.33% premium to the failed offer from Country Bird last year, vindicating the Sovereign Foods board’s strong recommendation to its shareholders at the time not to accept the Country Bird offer,” the company said.
Tom Pritchard, Sovereign Foods chairperson, said: “The board was always open to recommending an offer to shareholders, provided significant shareholder value was unlocked. This is now the case.”
The offer is subject to Competition Commission approval and the delisting of Sovereign from the JSE.