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Sovereign makes a return to spotlight
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Traders said about 2-million shares changed hands in one deal that was thought to be the final unwinding of RECM’s stake in Sovereign.
The share price closed at 939c on Friday.
Marthinus Stander, CEO of Country Bird Holdings (CBH), which launched a dramatic takeover bid for Sovereign in September 2015, said he had no knowledge of what was behind the trade.
He said there had been no developments with the proposed acquisition, which was suspended late last year when the Takeover Regulation Panel ruled the offer had lapsed.
The panel said CBH could not make another offer until September 2017. Stander earlier this year said CBH, which has built up a 34.1% stake in Sovereign, had no intention of walking away from its bid to acquire a controlling stake.
The acquisition would help CBH to move further down the value chain.
Last week’s strengthening in the Sovereign share price was all the more dramatic as it coincided with a sharp drop in Astral Foods’ share price.
It plummeted from a high of R157 on Tuesday to a close of just over R142. The fall was prompted by a trading update advising shareholders that headline earnings per share for the six months to March 2017 would be down by between 50% and 60%.
This means headline earnings per share are expected to be between 387c and 310c.
The share price slumped despite last week’s update reflecting a slight improvement on the early February update, which pointed to an earnings decline of more than 75% for the interim. Astral said the improved outlook since early February was due to planned poultry production cutbacks in the three months to end-March.
The cutbacks were implemented to avoid prolonged overstock conditions. Astral was also able to adjust its selling prices to offset the effect of the new brining legislation.
The longer-term outlook for poultry producers had picked up recently in the wake of indications that government was willing to provide support for the industry as well as signs of relief from the drought.
Local producers had been rocked by the effect of high volumes of imports from Europe and Brazil. In recent months producers and workers have persuaded the government to take a tougher stance in exchange for investment and employment undertakings.
The recent scandal around contaminated meat exports from Brazil is likely to cut supplies from that country. However, last week’s ratings downgrade is expected to dampen economic activity.
Source: I-Net Bridge
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