Country Bird Holdings’ bid to buy fellow South African poultry group Sovereign Food Investments has taken a fresh twist, with the takeover target claiming its suitor’s move to change a key condition of its bid is illegal.
Sovereign Food Investments said yesterday (20 September) Country Bird’s decision to waive the condition that its offer must be accepted by a majority of Sovereign’s shareholders broke regulations.
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However, Country Bird has responded today to say it “strongly disagrees” with Sovereign Food Investments.
In July, Country Bird, which along with so-called “concert parties” already owned just short of 10% in Sovereign Food Investments, tabled a ZAR9-a-share offer for the rest of the business. Announcing the bid, Country Bird said the offer would become unconditional once it, together its concert parties, held 50% plus one share in the business. Country Bird said the offer would terminate on 13 September – the 45th business day after the offer opened – unless it has been declared unconditional before then.
On 13 September, Country Bird announced it had “waived” the condition – and the bid was “unconditional as to acceptances”, though it remained subject to other conditions, including competition approval. A day later, after taking into account the impact of a public holiday on 3 August, Country Bird announced the bid had become unconditional
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However, the move was met with a fierce response from Sovereign Food Investments.”Shareholders are hereby notified that Sovereign has taken legal advice in relation to the purported waiver and that it is of the view that the purported waiver is unlawful,” Sovereign Food Investments said in a statement to the Johannesburg stock exchange yesterday.
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By GlobalDataSovereign Food Investments said it would apply to South Africa’s Takeover Regulation Panel for a formal ruling “inter alia, to the effect that the Purported Waiver is contrary to the Companies Act and the Companies Regulations, 2011 and hence unlawful and of no force or effect”.
The company said it would also apply to the panel for a ruling that County Bird’s offer did not become unconditional as to acceptances and “accordingly lapsed” last week. “Sovereign will notify Shareholders of further developments in due course,” it added.
In a statement today, Country Bird said: “CBH has, as yet, not received any documentation from Sovereign regarding the Sovereign challenge and accordingly does not know on what basis Sovereign believes the waiver to be unlawful. CBH strongly disagrees with the view that the waiver is unlawful and is surprised by the Sovereign challenge considering that CBH has removed an obstacle to Sovereign shareholders accepting the offer, which is to the benefit of Sovereign shareholders.
“Despite the independent board of Sovereign unanimously finding the offer to be both fair and reasonable, the Sovereign board has continued to oppose the offer at considerable expense to Sovereign shareholders. CBH would like to take this opportunity to reassure Sovereign shareholders that the offer remains open and accordingly, Sovereign shareholders are encouraged to continue accepting the offer.”
