Nod for Sov­er­eign Foods buy­out

Share­hold­ers vote to ac­cept Bidco’s R907m cash of­fer for Uiten­hage poul­try pro­ducer

The Herald (South Africa) - - BUSINESS - Shaun Gill­ham gill­hams@ti­soblack­star.co.za

SHARE­HOLD­ERS of South Africa’s fourth-largest poul­try pro­ducer, Sov­er­eign Foods, have ac­cepted a R907-mil­lion cash of­fer for a full buy­out of the Uiten­hage­based com­pany.

This comes shortly af­ter the com­pany man­aged to con­tain an out­break of avian in­fluenza, which had forced Sov­er­eign to cull thou­sands of chick­ens af­ter the flu was de­tected at a Uiten­hage layer house last month.

At R12 per share, share­hold­ers ac­cepted the firm in­ten­tion from spe­cial-pur­pose ve­hi­cle Bidco, which is con­trolled by Jo­han­nes­burg-based Cap­i­tal­works, at a gen­eral meet­ing in Port El­iz­a­beth on Mon­day.

The of­fer was con­di­tional on the delist­ing of Sov­er­eign shares from the JSE, which share­hold­ers also ac­cepted.

Bidco made two sep­a­rate but con­cur­rent cash of­fers to ac­quire the shares, ex­clud­ing trea­sury shares, by way of a scheme of ar­range­ment and a gen­eral of­fer.

Sov­er­eign chief ex­ec­u­tive Chris Coombes said the com­pany was pleased with the vot­ing re­sult of the gen­eral meet­ing.

“It is in­dica­tive of the over­whelm­ing sup­port by Sov­er­eign share­hold­ers for the of­fer,” he said.

Sov­er­eign also an­nounced last week that the flu out­break had been suc­cess­fully con­tained.

“The cu­mu­la­tive loss of pro­duc­tion to date rep­re­sents about 1% of Sov­er­eign’s to­tal pro­duc­tion pipe­line,” he said.

“We are mon­i­tor­ing the sit­u­a­tion and will con­tinue to im­ple­ment strict biose­cu­rity con­trols at all of our sites in the East­ern Cape and Gauteng. To date, our Gauteng fa­cil­i­ties have not been af­fected.”

The com­pany said in a state­ment: “The of­fer was priced at R12 cash per Sov­er­eign share, which rep­re­sents a 33.33% pre­mium to the failed of­fer from Coun­try Bird Hold­ings (CBH) last year, which was priced at R9 per Sov­er­eign share.

“It has been in­cor­rectly re­ported in the me­dia that the of­fer has been made in con­junc­tion with Sov­er­eign board and man­age­ment and/or that the of­fer is a man­age­ment buy­out.

“The of­fer has been made solely by Cap­i­tal­works, through Bidco, although the Sov­er­eign board and man­age­ment are sup­port­ive of the of­fer.”

In a strong demon­stra­tion of sup­port, share­hold­ers hold­ing 89.84% of the to­tal Sov­er­eign shares in is­sue [in­clud­ing trea­sury shares] at­tended or were rep­re­sented at the meet­ing.

“In terms of the scheme, and sub­ject to ob­tain­ing the out­stand­ing reg­u­la­tory ap­provals, own­er­ship of Sov­er­eign Foods will pass to Bidco, who will ac­quire 100% of the Sov­er­eign shares in is­sue, ex­clud­ing trea­sury shares,” the state­ment said.

“As a re­sult, it is an­tic­i­pated that Sov­er­eign Foods will be delisted from the JSE later this year.”

Sov­er­eign spokes­woman Dr Carla Zdanow said it was an­tic­i­pated that the com­pany would be man­aged in a sim­i­lar man­ner to what it was at present if the trans­ac­tion was im­ple­mented.

“The of­fer re­mains sub­ject to cer­tain reg­u­la­tory con­di­tions prece­dent,” she said.

“A SENS an­nounce­ment will be pub­lished in due course, set­ting out the per­ti­nent dates in re­spect of im­ple­men­ta­tion of the trans­ac­tion and pay­ment of the pur­chase con­sid­er­a­tion to share­hold­ers and the delist­ing.”

It is in­dica­tive of the over­whelm­ing sup­port by Sov­er­eign share­hold­ers for the of­fer

Zdanow said the im­me­di­ate fo­cus go­ing for­ward would be on the ful­fill­ment of the re­main­ing reg­u­la­tory con­di­tions prece­dent and the im­ple­men­ta­tion of the trans­ac­tion.

She said the com­pany did not be­lieve the flu had had any ma­jor im­pact on the ac­cep­tance of the of­fer.

“Prior to the SENS an­nounce­ment, share­hold­ers hold­ing more than 54% of the Sov­er­eign shares had al­ready in­di­cated their in­ten­tion to vote in favour of the res­o­lu­tions.

“We be­lieve that the vote is re­flec­tive of the over­whelm­ing sup­port for the Cap­i­tal­works/Bidco of­fer and not re­lated to the SENS an­nounce­ment [about the flu],” Zdanow said.

Pic­ture: GALLO IM­AGES

SAFETY MEA­SURES: Chicken farmer Jab­u­lani Richard Ng­wenya is im­ple­ment­ing strict biose­cu­rity to safe­guard his farm from the deadly bird flu, af­ter fa­cil­i­ties in Uiten­hage were re­cently hit by an out­break of the dis­ease

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