Nod for Sovereign Foods buyout
Shareholders vote to accept Bidco’s R907m cash offer for Uitenhage poultry producer
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.