Quantum Foods’ Directors buy US$1.1m worth of stake amid rising interest by third parties

SOUTH AFRICA – Four board members of South African animal feeds and poultry producer, Quantum Foods have bought about R20m (US$1.1m) of the group’s shares, amid rising interest for the company’s stake by various third parties.

Share purchases by the Directors include an almost R15.8m (US$0.93m) spend by Board Chair Wouter Hanekom, who now holds 5.2% of SA’s largest egg producer, reports Business Live.

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The group, which has a market capitalisation of R1.3bn (US$77m), had revealed that at least one third party was in talks with some of its institutional investors in a bid to buy about a 32% shareholding.

Quantum said its understanding was that the third party was not interested in purchasing the rest of the group’s shares.

It also said in a statement that Country Bird Holdings (CBH), which holds 30.81% of the group, had indicated in June it would make an offer to shareholders for the remaining shares it does not own, but then days later it opted not to do so.

CBH, an integrated poultry and stock feed business with operations in South Africa, Botswana, and Zambia was not the party in talks with institutional investors, the statement read.

“The company is not currently in receipt of any offer or potential offer to acquire all or a portion of the company’s shares and does not consider it necessary, nor appropriate, to publish a cautionary announcement at this time,” Quantum said.

CBH had been interested in Quantum as it was an egg specialist, which would have been a good fit for the company as a poultry producer, CEO CBH Marthinus Stander said.

“But we learnt that there was another party involved, and it was not our intention to get into a bidding war,” he said. “We are comfortable with our stake, Quantum is a great company with great management,” Stander said.

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In June, agribusiness and food industry focused investment group, Zeder Investments offloaded all its 61.6 million shares held in Quantum to CBH.

According to Zeder’s statement announcing the disposal, the company sold the shares at R5 per share fetching a total of R308m (US$18m).

“It proved to be a very good price for which we obtained that stake, especially in hindsight,” Stander added.

The frenzy in bidding for Quantum was intriguing, said Small Talk Daily’s Anthony Clark. The purchase of shares by directors indicated that Quantum either wanted to remain independent, or “is perhaps seeking its own white knight to fend off the foxes”.

Quantum was spun-out of Pioneer Foods in 2014 and has since restructured its operations, including exiting the cyclical chicken meat business.

Its national spread of interests in eggs, broilers and animal feeds would appeal to many sector players.

Quantum Food’s share price has risen more than 90% in the last three months, including a 25.26% jump on Friday, its best performance since listing in 2014.

South Africa holds the major share of the poultry feed market as the country leads in poultry production. The poultry industry is the largest sector of South African agriculture accounting for 19.8% of total agricultural production, and 40.0% of total animal products.

In 2018, the South African consumers spent approximately US$15 billion on meat products and Poultry meat represents more than 60% of total meat consumed.

According to a report by Coherent Market Insights, the global poultry market was valued at US$ 267,332.3 Mn in 2018, and is expected to exhibit a CAGR of 3.0% over the forecast period 2019–2027, in terms of revenue.

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