Capitalworks, a private equity firm with more than $515 million in assets, has had its offer to buy out Sovereign Foods accepted by the JSE-listed company’s Board of Directors. The all-cash deal will be transacted through Gallus Holdings, a special purpose vehicle funded by Capitalworks, which will pay approximately $67 million to acquire all of Sovereign Food’s outstanding shares. The deal is subject to approval by the Competition Commission.
The price paid for the shares will be R12 which represents an almost 19% premium on the stock’s 30-day trailing average and a 33.3% premium over the price offered by Country Bird Holdings in its failed bid for Sovereign Foods last year. Founded in 948 in South Africa’s Eastern Cape, Sovereign Foods has grown to be one of Africa’s largest poultry producers. Fully vertically integrated, the firm raises its own chickens going on to produce a range of branded fresh and ready-made products. For 2017’s fiscal year, the firm delivered revenues of R2.164 billion, a 25% increase on the same period in the prior year. Operational EBITDA was only 2.3%, a result of higher feed prices.
Based in Sandton, Capitalworks manages three private equity funds holding diverse portfolios of assets. These include majority interests in Rhodes Food Group and South African boat builder Robertson & Caine, and most recently, a deal to acquire insurance giant Aon’s shareholding in 10 employee benefit, insurance and reinsurance brokerage operations in several sub-Saharan African countries.