CAPITALWORKS TO BUY SOVEREIGN

CityPress - - Business - JUSTIN BROWN justin.brown@city­press.co.za

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.

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