Pro­ducer seeks bird in the hand

The Sunday Independent - - BUSINESS REPORT - Sandile Mchunu

COUN­TRY Bird has said it will not give up on the merger with another poul­try pro­ducer, Sov­er­eign Food, de­spite the Com­pe­ti­tion Tri­bunal block­ing the move and re­fer­ring the de­ci­sion back to the Com­pe­ti­tion Com­mis­sion.

Coun­try Bird chief ex­ec­u­tive Marthi­nus Stander said he re­mained hope­ful a favourable de­ci­sion could be reached with the com­mis­sion again. He said the set­back did not mean the com­pany would no longer pur­sue the pro­posed merger.

Sov­er­eign has been the tar­get of a takeover by Cap­i­tal­works en­ter­ing the race last month to ac­quire the com­pany through a spe­cial pur­pose ve­hi­cle.

Cap­i­tal­works said it wanted a con­trol­ling stake in Sov­er­eign for R907 mil­lion in an all-cash buy-out, valu­ing the com­pany at R12 a share. The Cap­i­tal­works of­fer has the back­ing of the Sov­er­eign board.

The merger talks started when Coun­try Bird tabled an of­fer to ac­quire the en­tirety of Sov­er­eign’s shares in July last year for R9 a share. The ini­tial of­fer was de­pen­dent on Coun­try Bird ob­tain­ing 50 per­cent plus one share in Sov­er­eign be­fore the ter­mi­na­tion date.

When Coun­try Bird noted it would not reach the thresh­old re­quired by its own of­fer in the des­ig­nated time, it is­sued a cir­cu­lar amend­ing it and waiv­ing the ac­cep­tance con­di­tion.

The com­mis­sion, act­ing un­der the im­pres­sion that the merger would only take place by Coun­try Bird ac­quir­ing, at min­i­mum, a 50 per­cent plus one share in Sov­er­eign, ap­proved the trans­ac­tion and im­posed em­ploy­ment con­di­tions which would only be bind­ing upon Coun­try Bird if it were to come to con­trol a 50 per­cent plus one share in Sov­er­eign.

Coun­try Bird holds a 9.5 per­cent stake in Sov­er­eign.

Sov­er­eign there­after ap­proached the tri­bunal, ask­ing for a re­view of the com­mis­sion’s de­ci­sion. The tri­bunal said it was not clear un­der what terms the com­mis­sion had ap­proved the merger.

How­ever, this week the tri­bunal said the mat­ter should be re­ferred back to the com­mis­sion.

“Cen­tral to our find­ing is an in­her­ent un­cer­tainty as to what merger the com­mis­sion ap­proved,” the tri­bunal said. “Whether it is the ac­qui­si­tion of de jure con­trol by Sov­er­eign, ie an ac­qui­si­tion of 50 per­cent plus one share, or the ac­qui­si­tion of de facto con­trol, ie the abil­ity to com­mand a ma­jor­ity in a share­hold­ing meet­ing.”

Sov­er­eign was not avail­able for com­ment.

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