Trade department throws spanner in Country Bird’s bid

Johannesburg - Sovereign Food shares shed almost 8 percent on the JSE yesterday after the Department of Trade and Industry’s takeover regulation slammed the brakes on its planned takeover by Country Bird.

The shares closed 7.4 percent lower at R8.51 as the regulation panel ruled that the purported waiver by Country Bird was contrary to the Companies Act and companies regulations.

The ruling came after Country Bird issued the waiver in September, which Sovereign described as unlawful and with no force or effect.

Challenged

Sovereign challenged the purported waiver and applied to the Takeover Regulation Panel for a formal ruling. Yesterday the panel ruled in favour of Sovereign and said Country Bird should pay the costs.

The Country Bird bid for the Sovereign takeover led to a protracted dispute between the two companies. In July, Country Bird announced that it had tabled an offer of R9 a share to take over a controlling stake in Sovereign.

The move was described by industry experts as a hostile takeover bid, who charged that the success of the buyout offer was dependent on the response by institutional shareholders, particularly Prudential, Old Mutual and Sanlam, as well as RECM & Calibre.

The shareholders represent about 55 percent of Sovereign.

Country Bird currently holds a 9.75 percent stake in Sovereign Food.

In March, Sovereign approached the Competition Tribunal for an order that Country Bird’s acquisition of shares in the company should be considered a merger.

The tribunal ruled that Country Bird’s bid, indeed, amounted to a merger.

Country Bird chief executive Marthinus Stander said he was disappointed with the ruling.

Proceeds

“These shareholders (which are about 200) will be prevented from realising proceeds from the willing buyer and willing seller transaction, which was there because of our fair and reasonable offer,” he said.

Stander said these shareholders would be forced to sell their shares in the open market.

He said Country Bird was considering taking the matter to the High Court.

“We have invited Sovereign numerous times so that we may find pragmatic solutions which would result in a better future for both companies. They have consistently declined such approaches,” Stander said. “We are now considering the options of seeking resolution from the High Court.”

Sovereign said it could not comment at this point.

BUSINESS REPORT