Eastern Cape-based Sovereign Foods has accepted a cash buy-out offer totalling R903m from a special purpose vehicle controlled by Capitalworks, an independent asset management company.
The JSE-listed company which is based in Nelson Mandela Bay made the announcement on SENS on Thursday.
CEO Chris Coombes said in a statement that the offer was subject to, among other things, Competition Commission approval and the delisting of Sovereign from the JSE.
He also said that they were pleased that shareholders held out for a better offer after rejecting a buy-out bid Country Bird Holdings last year.
Coombes said the Capitalworks offer came at a 33% premium on the Country Bird 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," he said.
"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," Coombes said.
"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 CEO of the Soverign Foods Board, Tom Pritchard, said that the "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."
"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."
