Sovereign Foods: No Signs of Takeover

UITENHAGE-BASED poultry group Sovereign has ruled out a predatory swoop by a larger rival following the publication of a cautionary announcement last week. Consider buying this local company on the JSE using EasyEquities trading platform.

Poultry food business ChickenThe cautionary spurred widespread speculation that a larger competitor — most likely Astral Foods or recently delisted Country Bird Holdings — might be engaging Sovereign about a takeover.

Sovereign, despite a marked improvement in operating performance, continues to be modestly rated by the market. The share has traded at a discount to tangible net asset value, and on an earnings multiple of 8,5 times. About five years ago Sovereign was subject to well documented takeover bids — first by Country Bird Holdings and then by agribusiness conglomerate Afgri.

However, Sovereign — under fire recently for generous performance fees paid to its top executives — said it was “not aware of a ‘competitor transaction’ and the board is not engaged in any discussions in this regard.”

But Sovereign did say it is considering implementing a number of potential strategic initiatives — including the conclusion of a black economic empowerment transaction. The company said this was at an advanced stage.

source: Financial Mail


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