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Astral Foods Limited (Astral), an integrated poultry producer, has officially sold its 9,8% interest (equal to 19 550 855 shares) in Quantum Foods Holdings Limited (Quantum). The total consideration for this transaction amounts to R141,7 million. The sale was carefully evaluated by Astral’s full board of directors, and it was executed through a ‘book over’ process, effective from 5 March 2024. No regulatory approvals are required by Astral for this transaction.
Chris Schutte, CEO of Astral, commented: “At the time Astral acquired the 9,8% equity stake in Quantum in June 2020, there were unmitigated risks the group had to manage. These risks centred around securing the supply of live broilers to Astral’s County Fair operation in the Western Cape from Quantum. Quantum supplies Astral with approximately 600 000 broilers per week for further processing. That is approximately 35% of County Fair’s total slaughter capacity.”
Read more about Astral Foods here.
The offer price received was R7,25 per share, an approximate 70% premium to the current market value. As the Quantum shares are not sufficiently liquid, Astral accepted the offer for its 9,8% equity stake. This decision avoided the need to trade the shares on the open market, which would have taken a considerable amount of time and could have negatively impacted the Quantum share price. The proceeds from the sale, totalling R141,7 million, exceed the carrying value of Astral’s investment of R97,8 million as of 30 September 2023.
Schutte concluded: “The unsolicited offer from Country Bird Holdings (CBH) has allowed Astral to divest of its passive minority interest in Quantum as it was never intended to be a long-term investment for the group.
A five-year term remains on the existing broiler supply agreement and Astral has sufficient time to implement mitigating actions should the supply agreement come under threat at the end of the contractual period. This cash injection contributes positively to rebuilding Astral’s balance sheet that was impacted negatively by an array of headwinds in 2023.” – Press release, Astral
