The group advised its shareholders almost two weeks ago that a private equity firm focussed on mid-market investments in South Africa wanted to acquire a controlling interest in Sovereign Food for R907 million in an all-cash buyout offer.
“Shareholders are advised that since the firm intention announcement a further 10 shareholders have provided irrevocable undertakings to Capitalworks in support of the offer and as at the date of this announcement, the total shareholder support for the offer represents 54.09% of the offer shares,” the group said. Before that the key condition for the transaction was Capitalworks acquisition of more than 50% of Sovereign Food's issued shares.
Capitalworks announced up front that it had the support from shareholders holding more than 50.8% of Sovereign Food's shares. The all-cash offer is priced at R12 per Sovereign Food share, with a reinvestment option available to shareholders. The group said shareholders could reinvest by disposing of their Sovereign Food shares for shares in the special purpose vehicle (Bidco), up to an aggregate 15% interest in Bidco following implementation of the offer.
The offer is fully funded by Capitalworks and is not conditional upon any external funding.
The group said shareholders will receive interest of 7% on the cash consideration, compounded monthly, from January 1, 2018, until they receive the cash consideration if the offer is implemented after this date, although expectations are that it will be completed before year end.
The offer comes at a 33.33% premium to the failed offer from Country Bird Holdings last year, which was priced at R9 per Sovereign Food share, vindicating the Sovereign Food board’s strong recommendation to its shareholders at the time not to accept the offer.
The R12 offer also comes at a 44.58% premium to the closing price of a Sovereign Food share on November 9, 2016, the day after it became known that the Country Bird offer had failed.
Country Bird holds a 9.5% stake in Sovereign Food.
The offer also has the support of both Sovereign Food chairperson Tom Pritchard and chief executive Chris Coombes.
The offer was subject to, among other things, Competition Commission approval and the delisting from the JSE.
Sovereign Food shares dropped 2.93percent yesterday on the JSE to close at R11.26.