Sale of Quantum Foods stake ruffles poultry producer's feathers

  • Astral says its agreement with Quantum is too lucrative to walk away from.
  • Quantum supplies Astral with 500 000 broiler chickens a week.
  • Quantum's share price has more than doubled in just over a month.
  • For Astral, feathers hit the fan when a stake in Quantum was sold to Astral's competitor, Country Bird Holdings, last month.


Poultry producer Astral fears that the sale of a stake in Quantum Foods means a competitor will get its claws on a valuable supplier agreement with the company.

Astral, which is one of South Africa’s biggest chicken producers, acquired a 6.42% stake in Quantum Foods on Tuesday. Astral owns fresh and frozen chicken brands such as Festive, Goldi, County Fair and Mountain Valley.

Every week for the past five years, Quantum has been providing Astral with 500 000 broiler chickens, making up 30% of the capacity of Astral’s Western Cape production facility.

Quantum is an agricultural company which was spun out of Pioneer foods in 2014. It produces eggs, broiler chickens and animal feed. Its share price has skyrocketed in just over a month, and it has reportedly drawn interest from several entities keen on gaining a stake in the company.

Daan Ferreira, CFO of Astral, said the agreement between Astral and Quantum had initially experienced no hiccups.

Competitor on the horizon

However, things changed when Zeder, an agribusiness investment company, sold its 30% stake in Quantum. Zeder, an agribusiness company, sold its stake to Astral’s competitor Country Bird Holdings (CBH) last month.

"It worked well for us and it worked well for them, we were at peace. Then … what ruffled the feathers, was when Zeder had the [32%] interest in Quantum and they sold it 30% to Country Bird," said Ferreira.

Ferreira said the biggest concern was Country Bird’s intention to become a controlling shareholder in Quantum, which would jeopardise the independence of its supplier contract with Astral.

"So the whole rationale from Astral’s point of view was to protect its vested interest in the supplier agreement," said Ferreira.

Losing the agreement means Astral would have to begin a costly and time-consuming process of increasing capacity in its breeding and broiler operations, said Ferreira.

"So that investment is huge because it’s new capital; we’d have to buy land and do environmental studies, and that takes time, so it could be a huge disruption for us if that supplier agreement is sacrificed."

Ruffled feathers

Zeder’s unloading of its Quantum shares resulted in a flurry of excitement in the sector with Silverlands II SCSp, a Luxembourg-based investment fund buying 32% shares in the company last week.

Smalltalk Daily analyst Anthony Clark said the company’s directors now own about 8% of its shares, which they bought this month.

"The fact that Quantum Foods itself has bought shares in the business and they have said that they are very happy that Silverlands partners are on board as long-term strategic shareholders, that suggests to me, they never wanted Bird to make the bid," he said.

He said it made strategic sense for Astral to buy its stake in Quantum because of the broiler agreement the two have, which is 11% of Quantum’s production.

Fellow chicken producer Sovereign Foods also has a similar contract, and if it walks away from its agreement and Astral Foods does the same, then Quantum foods would lose 40% of its business.

However, Clark said that if Zeder had not walked away, Quantum would not be seeing he interest it has seen now in its business.

News of Zeder’s sale of its shares resulted in Quantum’s stock roughly doubling in a matter of weeks to close at R9.90 on Thursday.  

"The fact that Quantum Foods itself has bought shares in the business and they have said that they are very happy that Silverlands partners are on board as long-term strategic shareholders, that suggests to me, they never wanted Bird to make the bid," said Clark.

He added that that Quantum will now likely sell its 8% stake to Astral Foods or to Silverlands, since Country Bird is unlikely to get a controlling share in the company, unless it acquires Silversands’ stake, which would come at a high price.

He said it made strategic sense for Astral to buy its stake in Quantum because of the broiler agreement the two have, which is 11% of Quantum’s production.

Quantum's CEO would not be drawn into discussing the activity around the company's shares, saying that the matter was ongoing.

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