Shareholders can reinvest by disposing of their Sovereign Foods shares for shares in the special purpose vehicle (Bidco), up to an aggregate 15% interest in Bidco following implementation of the Offer.
JSE listed Sovereign Food Investments Limited (Sovereign Foods) announced on SENS today that it has received a firm intention from a special purpose vehicle controlled by Capitalworks, a private equity firm focussed on mid-market investments in South Africa, to acquire a controlling interest in Sovereign Foods, amounting to a R907 million all-cash buy-out offer (Offer).
The all-cash Offer is priced at R12.00 per Sovereign Foods share, with a reinvestment option available to shareholders. Shareholders can reinvest by disposing of their Sovereign Foods shares for shares in the special purpose vehicle (Bidco), up to an aggregate 15% interest in Bidco following implementation of the Offer.
The Offer is fully funded by Capitalworks and is not conditional upon any external funding.
Shareholders will receive interest of 7% on the cash consideration, compounded monthly, from 1 January 2018 until they receive the cash consideration if the Offer is implemented after this date, although expectations are that it will be completed before year end.
A key condition to the Offer is that Capitalworks must acquire more than 50% of Sovereign Foods’ issued shares. To this end, Capitalworks announced upfront support from shareholders holding more than 50.8% of Sovereign Foods’ shares, demonstrating strong support for the Offer.
The Offer comes at a 33.33% premium to the failed offer from Country Bird Holdings (CBH) last year, which was priced at R9.00 per Sovereign Foods share, vindicating the Sovereign Foods board’s strong recommendation to its shareholders at the time not to accept the CBH offer.
The R12.00 Offer also comes at a 44.58% premium to the closing price of a Sovereign Foods share on 9 November 2016, the day after it became known that the CBH offer had failed.
Tom Pritchard, chairman of the board of Sovereign Foods, commented “the Board welcomes and supports this Offer from Capitalworks, which comes at more than a 33% premium to another conditional offer which the Board rejected about a year ago, which failed and then lapsed. The Board was always open to recommending an offer to shareholders, provided significant shareholder value was unlocked. This is now the case.”
Pritchard went on to state that “Capitalworks has received upfront support from more than 50% of Sovereign’s shareholders, which will satisfy a key condition to the offer and provides significant upfront certainty to shareholders.”
Chris Coombes, CEO of Sovereign, said “we are pleased that shareholders held out for another significantly higher offer. Shareholders now have the ability to accept an attractive cash offer despite the very limited current liquidity in Sovereign’s shares.”
The Offer is subject to, among other things, Competition Commission approval and the delisting of Sovereign from the JSE.
Issued on behalf of Sovereign Foods by Meropa Communications.