Shares in Quantum Foods soared 72.93% on the JSE yesterday following the offloading by Astral Foods of its 9.8% interest in the diversified feeds and poultry business this week for R141.7 million to Country Bird Holdings (CBH) in a shake-up that has sparked renewed interest and attention on the South African poultry industry.
Shares in Quantum Foods, with a market cap sitting at R1 billion, closed 72.93% higher yesterday on the JSE at R9.20.
The acquisition of the 19 550 855 shares in Quantum Foods by CBH, which already had a 6.45% interest, has bumped up its stake in the company to 16.25%.
“Quantum Foods’ shareholders are hereby advised that the Company has received a notification, in the prescribed form, from Astral Foods Limited, advising that it has disposed of its entire beneficial interest in the ordinary shares of the Company (‘Shares’), being 9.77% of the total issued Shares,” the company said yesterday.
Quantum Foods was now set to file the relevant notifications with the Takeover Regulation Panel and the Companies and Intellectual Property Commission, as per requirements under the Companies Act. However, it is yesterday’s leap in the company’s share price on the JSE that has ignited interest in Quantum Foods. Shares in Astral sagged 1.31% on the JSE yesterday to R144.22.
Quantum Foods supplies Astral with approximately 600 000 broilers per week for further processing, which makes up approximately 35% of County Fair’s total slaughter capacity.
Anthony Clark, an independent analyst at Smalltalkdaily Research, said yesterday that the share movements in Quantum Foods were significant as the company was currently “the hottest food stock” on the local market.
Quantum Foods, despite saying in a voluntary update in February that it was hit by a R37m loss from birds affected by avian flu in the quarter to January 31, 2024, says business conditions and margins have improved in the past few months.
Clark said the Quantum Foods share price had soared on the back of Astral Foods offloading its stock, with yesterday’s rally an indication of a battle for the control of the company.
“There are two opposing shareholder blocks and there is only about five 5% to 6% free float left in Quantum Foods and whoever controls the remaining free float basically gains control of Quantum Foods because you need 50.1% for that. If I was the owner of the remaining free float I could in theory name my price and clearly someone did that today (yesterday), saying I am selling my stocks at R9m,” he said.
Other analysts, however, said Quantum Foods was “illiquid, barely followed by the market and hardly owned by any institutional” funds.
“I see this as shuffling an existing deck of cards as the two opposing shareholder blocks remain. But the Astral sale to CBH certainly makes the story a touch more interesting given that CBH tried to take over Quantum Foods in early-2020 and was rebuffed leading to the current shareholder stand-off,” said one market watcher.
The South African poultry industry has been under sharp focus of late, with the Competition Commission last month launching a Poultry Market Inquiry.
According to the South African Poultry Association (Sapa), central to the inquiry will be the issue of the concentration of large companies in both the broiler and egg industries.
“There seems to be an underlying suspicion that this is bad for the industry and for consumers. We will provide the inquiry with our views on these matters,” said Sapa.
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