WELLINGTON-based Quantum Foods – which has quietly built niches in poultry, animal feeds and eggs – has suddenly become very hot property.
The last time CBN wrote on Quantum, (the June edition), the company was worth around R600m. At the time of writing Quantum’s market value had soared to close to R1.4bn.
What triggered a feeding frenzy at Quantum was a decision by its major shareholder, PSG controlled Zeder Investments, to sell its 31% stake in the business to poultry giant Country Bird Holdings (CBH).
No sooner had the ink dried on that deal, and other suitors started crowing for Quantum shares. What transpired was that international investor Silverlands – which has a specific focus on African agribusinesses – managed to coax other large shareholders to sell their shares. In the end Silverlands managed to scrape together a 32% stake in Quantum.
But the feeding frenzy continued. A number of Quantum directors – including chairman Andre Hanekom (the former CEO of Pioneer Foods) and CEO Hennie Lourens – also snapped up large parcels of shares. This meant senior management and directors spoke of a significant minority stake in the business – which is an important development remembering CBH and Silverlands have roughly similar sized stakes.
Then, out of the blue, SA’s biggest poultry business, Astral Foods, swooped, and snapped up a 6.4% stake in Quantum as well!
Naturally all these forays saw Quantum’s share price on the JSE effectively double over just a few weeks.
At this juncture it seems CBH’s plans to make a full takeover bid for Quantum have been foiled by the emergence of other large shareholders.
CBN is certain Quantum executives would prefer not to have a larger rival like CBH in control of the company, and perhaps re-setting the operational strategy. Gut feel is that Quantum management would be happier to work with a strategic shareholder like Silverlands – which is a major shareholder in another SA agribusiness, Crookes Brothers (which is covered elsewhere in this edition).
While Quantum is small player in the local poultry market, the group holds an important strategic position as a supplier of day old chicks to Astral Foods and Uitenhage-based Sovereign Foods.
Astral CEO Chris Schutte was on record saying that the material change in the shareholding of Quantum raised concerns that the current broiler supply agreement with the company could be jeopardised over the long-term. Quantum supplies approximately 30% of Astral’s live broiler chickens processed in the Western Cape, which equates to about 12% of the total broilers being slaughtered by Astral.
Schutte explained: “If there is to be a change in control of Quantum, it could adversely impact the broiler supply agreement with them, and Astral would most probably have to consider a significant investment in broiler production capacity to ensure the continued supply of live broiler chickens to its County Fair operation in the Western Cape.”
He said the rationale for acquiring a minority stake in Quantum was to ensure that Astral’s current arms-length medium to long term supply agreement with the group remained intact.