Country Bird not selling its stake after failed Quantum takeover bid

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  • Quantum and its shareholders successfully blocked Country Bird Holdings' takeover bid, with Quantum's directors buying up 8% of the company and finding a white knight in Luxembourg-based agricultural investment company Silverlands.
  • Quantum's CEO is not sure if the company would have been more welcoming to a less hostile takeover by Country bird. 
  • Country Bird Holdings hoped to grow its footprint through Quantum Foods and is not giving up on working with Quantum management despite not getting "invites for a cup of tea".

One of South Africa's biggest poultry companies, Country Bird, is determined to keep its shares in smaller rival Quantum Foods, despite its bid to take over the company being scuppered and a tense relationship with management. 

There was a flurry of excitement at poultry company Quantum over the past few weeks as it found itself having to bat off an unwanted takeover advance from Country Bird.

Country Bird acquired a 31% stake in Quantum from agribusiness investment company Zeder, as part of its strategy to have a controlling stake in the company, and grow its footprint.

However, the acquisition saw Quantum's directors run to buy up 8% of its shares, amounting to almost R20 million and finding a new buyer for 32% of the company.

Country Bird CEO Marthinus Stander told Fin24 "... the plan was originally to make an offer for the controlling stake but then it seems there was a concerted effort to find a white knight buyer, that came in the form of Silverlands".

Silverlands is a Luxembourg-based agricultural investment company that acquired 32% Quantum this month.

The acquisition meant that CBH could no longer get a controlling stake in Quantum, which has operations in the Western Cape, Eastern Cape, Gauteng as well as Uganda, Zambia and Mozambique.

The company produces animal feed, eggs, layer chickens and broiler chickens that are used for meat production and its brands include Nulaid, Nova Feeds, Bergvlei Chick and Bellevue Chix.

Astral Foods also bought a 6.42% interest in Quantum to protect a supplier agreement with the company, which it believed would be under threat if its competitor CBH had a controlling share.

Faced with the option to either stay or sell its shares, Stander said Country Bird was staying put.

"At this stage we are looking at working with management, we think it is a good company, it is well managed and see where time will take us. It does not exclude the option of selling it but we think it's a good thing, we are happy with our stake," said Stander.

He added that Country Bird had been willing to work with Quantum's management from the beginning of its takeover bid even though they were not getting "invites for a cup of tea". 

"Our DNA is that of being entrepreneurial in the industry, so we look for opportunities and in this case with Quantum, there is a nice geographic fit," Stander said.

A controlling stake in Quantum meant that Country Bird would broaden its local footprint beyond its Free State and North West operations.

Country Bird, which delisted from the JSE in 2014 is one of the largest poultry and animal feed producers in Africa and its brands include Supreme Chicken and Nutri Feeds.

The company also has operations in Botswana, Nigeria, Mozambique, Eswatini, Zambia and Zimbabwe.

It owns rights to KFC franchises in Zimbabwe and Zambia and in South Africa; it counts retailers such as Shoprite and Pick n Pay as its customers and supplies restaurants like Nandos, Steers and KFC with its chicken.

Stander said Country Bird had not anticipated the Silverlands acquisition, but the company was happy with its current stake, even though the new arrangement would be "complicated". 

Anthony Clark, an analyst at Small Talk Daily Research, said he believed Country Bird would eventually sell its shares since it doesn't have the controlling interest it wanted.

Quantum CEO Hennie Lourens would not be drawn into discussing the activity in the company over the past few weeks.

However, he said he wasn't sure if Quantum would have been more welcoming had Country Bird been less hostile in its move to takeover the company.  

"I actually thought about it. They have a history of attempted hostile take overs, so I don't know. I wouldn't like to speculate on that," he said.  

It's not the first time that Country Bird had found its move to acquire a controlling stake in a company blocked by management.

In 2016, the company began a takeover bid of then-struggling poultry producer Sovereign Foods, increasing its shareholding to 34% and moving to gain more shares.

But after more than a year, the bid that was not supported by Sovereign, fell through after private equity firm Capitalworks acquired more than 50% of the company's shares.

Country Bird acquired Opti Agri, a chicken and animal feed business for R296.4 million, following its failed Sovereign takeover.

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