Seeking a dignified exit from the constrained poultry sector, Pioneer Foods has finally managed to unbundle and list Quantum Foods as a separate entity.
Quantum Foods was now a self-contained listed business within the Pioneer Foods group with a focus on animal feeds, eggs, and broilers, among other operations, the listed food producer said on Friday.
It would be led by its new chief executive, Hennie Lourens, the group said at an investor presentation.
Pioneer Foods had already started with its exit plan when it announced its agreement with poultry producer Astral to supply up to 550 000 broilers a week to the group’s Country Fair division.
“The diversified nature of the four businesses’ focus limits Quantum Foods’s exposure to the volatile broiler market in South Africa, which is negatively impacted by imported produce and other imbalances inherent in the industry,” the group said.
It added that these steps were to guard against poultry import threats by reducing exposure to the broiler meat market in the Western Cape and increasing exposure to the egg and feed business.
The entity will also keep its eyes on further expansion opportunities on the African continent. Pioneer has also announced its plans to refocus the group into a branded consumer products business.
It owns brands such as Bokomo, White Star super maize meal, Sasko bread as well as a range of beverage product brands, including Ceres. The company said that this strategy did not include primary agriculture.
Quantum Foods, which would list on the JSE early next month, will aim to be the leading feed and animal protein business in Africa.
It said that due to its historical position in the Pioneer Foods group, Quantum Foods had an independent and well established operating structures. “Quantum Foods is an investment for long-term investors seeking exposure to food production on the African continent. It is a medium-sized business with significant exposure to the production of eggs,” Pioneer said.
The business owns Nulaid, one of the leading egg brands in the country. It also has a fully integrated egg and broiler business with access to superior genetics in both businesses.
Victor Seanie, an investment analyst at Kagiso Asset Management, said this was a smart way to exit the poultry business because the company could then not be pressed to find a buyer for its poultry subsidiary.
“It is essentially handing the businesses off to shareholders and giving them the option to disinvest from poultry, but still own the remaining Pioneer businesses,” he said.
Seanie added that by exiting a difficult business, Pioneer should be a better business overall. Quantum’s new management would also be allowed to pursue a focused strategy without having to consider the impact on Pioneer Foods.
Pioneer Foods shed 1.23 percent to R120.50 on Friday.