Johannesburg - The battle between poultry producer Sovereign Foods and agricultural company Country Bird Holdings has intensified since Country Bird made its intention known that it wanted to take over the control of Sovereign Foods.
Sovereign Foods informed its shareholders yesterday that it was going to challenge a purported waiver issued by Country Bird last week because it was unlawful.
Country Bird, which holds a 9.75 percent stake in Sovereign Foods, announced in July that it wanted to acquire the entire ordinary share capital of Sovereign. The takeover has not happened yet and the companies continue to go at each other’s throats.
It was reported that the success of Country Bird’s buyout offer will depend on the response by institutional shareholders, in particular Prudential, Old Mutual and Sanlam as well as investment company RECM and Calibre. The shareholders represent about 55 percent of Sovereign.
When the news broke, Sovereign Foods share price gained more than 16.55 percent in one day, after the unlisted Country Bird made the offer for the Eastern Cape-based poultry producer.
Country Bird tabled an offer of R9 a share to take over the control of Sovereign. When the offer was made, Sovereign share price was trading at around R8.20 per share on the JSE. However, the price has since climbed.
Attempts by Business Report to get the two companies to comment on the latest developments were unsuccessful.
Meanwhile, according to Sovereign Foods the purported waiver issued by Country Bird on September 13 was contrary to the Companies Act and the Companies Regulations of 2011 and therefore unlawful and of no force or effect. Sovereign said the offer did not become unconditional as to acceptances and accordingly lapsed last week.
Sovereign said it intended to challenge the purported waiver and would apply to the Takeover Regulation Panel for a formal ruling. They had consulted their lawyers, Cliffe Dekker Hofmeyr, to represent them on this matter. Sovereign said it would update its shareholders about the outcome at a later stage.
Over the last few months poultry producers in the country have been under pressure following the cheap poultry imports coming from the US, Brazil and Poland.
Country Bird wants to increase its role in the poultry industry in the country as it currently holds 7 percent of the broiler industry in South Africa, which is dominated by Astral and Rainbow. Sovereign Foods closed 1.09 percent up to close trade at R9.25.
BUSINESS REPORT