Astral Foods sells minority interest in Quantum Foods

A minority equity stake was acquired in 2020, when there were unmitigated risks that the group had to manage.

Chicken 7761575 1920
Timdebays | Bigstock

South Africa’s largest integrated poultry producer Astral Foods has sold its minority interest in Quantum Foods to Country Bird Holdings for a sum of 141.7 million rand (ZAR; US$7.6 million).

The transaction involved a 9.8% interest in Quantum Foods, and did not require regulatory approval, according to Astral Foods.

A minority equity stake was acquired in 2020, when there were unmitigated risks that the group had to manage, said Astral Foods’ CEO Chris Schutte.

“These risks centered on securing the supply of live broilers to Astral’s County Fair operation in the Western Cape from Quantum,” he said. “Quantum supplies Astral with approximately 600,000 broilers per week for further processing, or about 35% of County Fair’s total slaughter capacity.”

In order to avoid trading the shares on the open market in 2020, and any adverse impact on Quantum’s share price, Schutte says that Astral Foods accepted the near-10% passive minority stake in the company.

The latest sale price exceeds the value of Astral’s investment in September of last year, which was put at ZAR97.8 million.

According to Schutte, his company’s investment in Quantum Foods was never intended to be long-term, and the offer from Country Bird Holdings (CBH) was unsolicited.

“This cash injection contributes positively to rebuilding Astral’s balance sheet that was impacted negatively by an array of headwinds in 2023,” he said.

Currently, there remains a five-year term in the agreement under which Quantum supplies broilers to Astral Foods.

Announcement of the change led to a sharp increase in both the trading in, and value of Quantum shares, according to Business Day.

It reported that while the intentions of CBH were unclear, there were signs of a battle to gain a majority share of Quantum.

On March 13, Quantum Foods’ board announced to its shareholders that it has received a letter from CBH. This makes clear CBH has no intention of making a takeover bid for Quantum Foods. 

More on Quantum Foods

Despite a double-digit increase in revenue for the last financial year, Quantum Foods posted an operating loss for 2022-2023. This was attributed mainly to power supply issues, and outbreaks of avian influenza (AI).

Primarily a South Africa-based agribusiness, it has four main areas of operation, namely animal feeds, eggs, layer and broiler production, as well as similar businesses in Mozambique, Uganda, and Zambia.

For 2022-2023, Quantum Foods reported good performance by its animal feed operations. Meanwhile, its egg business was showing signs of recovery following a drop in output due to AI. As well as below-average growing performance, the firm’s broiler operations were hit by AI in breeder flocks. 

More on South Africa’s poultry sector

According to the’s Top Poultry Companies survey, annual slaughterings of 290 million chickens make Astral Foods the largest poultry producer in South Africa — indeed, on the African continent. Fourth in the national rankings comes Country Bird Holdings (75 million), and with output of over 45 million birds, Quantum Foods is its sixth largest chicken producer.

In recent weeks, the Competition Commission has opened an investigation into fairness and transparency in the South African poultry market.

Last week, the country’s second largest poultry company RCL Foods announced its decision formally to separation its Rainbow business, which covers its poultry and feed operations. Around the same time, the company reported improved half-year fiscal performance.

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