SOUTH AFRICA – Country Bird has said that it would not give up on the merger with another poultry producer Sovereign Food, despite the Competition Tribunal blocking the move and referring the decision back to the Competition Commission.
Country Bird chief executive Marthinus Stander said he remained hopeful that a favourable decision could be reached with the commission again.
Stander said the setback did not mean that the company would no longer pursue the proposed merger.
“The tribunal’s decision is merely about ‘which acquisition of control’ definition the Commission considered in its original decision, i.e. de facto (control at a level below 50 percent) or de jure (control at 50 percent plus one), which is very technical in nature,” Stander said.
Sovereign has been a target of major takeover with Capitalworks last month entering the race to acquire the company through a special purpose.
Capitalworks said it wanted a controlling stake in Sovereign for R907 million in an all-cash buy-out, valuing the company at R12 a share. The Capital works offer has the backing of the Sovereign board.
The merger talks started when Country Bird tabled an offer to acquire the entirety of Sovereign’s shares in July last year for R9 a share.
The initial offer was dependent on Country Bird obtaining 50 percent plus one share in Sovereign before the termination date.
When Country Bird noted that it would not reach the threshold required by its own offer in the designated time, it issued a circular amending it and waiving the acceptance condition.
The commission, acting under the impression that the merger would only take place by Country Bird acquiring, at minimum, a 50 percent plus one share in Sovereign, approved the transaction and imposed employment conditions which would only be binding upon Country Bird if it were to come to control a 50 percent plus one share in Sovereign.
Country Bird holds a 9.5 percent stake in Sovereign.
Sovereign thereafter approached the tribunal, asking for a review of the commission’s decision. The tribunal said it was not clear under what terms the commission had approved the merger.
However, the tribunal this week said the matter should be referred back to the commission.
“Central to our finding in this matter is an inherent uncertainty as to what merger the Commission approved,” the tribunal said.
“Whether it is the acquisition of de jure control by Sovereign, i.e. an acquisition of 50 percent plus one shares or the acquisition of de facto control i.e. the ability to command a majority in a shareholding meeting.”
Sovereign was not immediately available for comment.