SOUTH AFRICA – A company linked to the prime mover behind poultry group Country Bird Holdings (CBH) has snapped up a significant minority stake in Sovereign Food Investments, a Uitenhage-based chicken producer.
A SENS disclosure on Friday confirmed that the Buzby Trust had accumulated a 7.61% stake in Sovereign. This follows a large book-over trade in the company’s shares on New Year’s Eve — a development reported earlier last week in Business Day.
The link between Kevin James — who is the majority shareholder in CBH (which delisted from the JSE last year) — and the Buzby Trust was not disclosed in the SENS disclosure. But CBH’s old circulars and annual reports show a related party link between Mr James and the Buzby Trust.
Sovereign, which trades at a discount to net asset value, despite some solid operational performances, has been the source of persistent speculation around a possible takeover by a larger poultry player.
The move by the Buzby Trust is somewhat surprising since most market watchers believed Astral Foods was the most likely to swoop on Sovereign.
This would be the second time Mr James has bought into Sovereign. In 2009, CBH built a significant minority stake in Sovereign, but retreated when Sovereign shook off its takeover advances and opted to recapitalise itself with a rights issue.
The Buzby Trust investment’s timing is critical, coming just ahead of a general meeting where Sovereign shareholders will vote on a scheme to revamp the black economic empowerment shareholding structure, buy back its own shares and set up mechanisms to allow directors to participate more meaningfully in equity.
Sovereign’s board has recently been under fire from certain minority shareholders after performance bonus payments ripped a chunk out of the last financial year’s earnings.
Sovereign, however, recently disclosed irrevocable undertakings to support the scheme from several prominent institutions including Prudential (the largest shareholder with a 21% stake), Sanlam (12.7%), RECM & Calibre (11.8%), Old Mutual (7.6%) and Personal Trust (3.2%).