Country Bird, South Africa's 3rd-largest poultry producer, said it was keeping its options open regarding whether it would eventually acquire Sovereign Foods, reports allAfrica.com.
According the poultry group's financial director Robbie Taylor, Country Bird could exploit synergies if it were to acquire Sovereign.
Meanwhile, Afgri has made known its intention to reverse list Afgri Foods, which houses its poultry, feed milling and edible oil businesses, into Sovereign, and become a 77% shareholder in the enlarged entity. Afgri has valued the business it wants to reverse list into Sovereign at R1.02 bln.
Taylor was relaxed about the potential of a tug-of-war for Sovereign but said his company wanted an outcome that was acceptable to shareholders.
He said it was possible some Sovereign shareholders would prefer a deal with Afgri, yet others would be keen to exploit the benefits of being owners of a bigger diversified poultry group that combined the interests of Country Bird and Sovereign. But he was surprise that Afgri would feel its offer was better than the one Country Bird could eventually put to Sovereign shareholders.
"The interesting thing is that Afgri have put out the terms of their offer and it would be pointless for Country Bird to subsequently put out a second offer that is worse than the one on the table," he said. "These are the things we are evaluating right now before we make an offer, if indeed we make one at all."
Country Bird, which has already built a 13,4% stake in Sovereign through open-market transactions, recently said it might consider making an offer to acquire the whole company as part of an expansion strategy. Taylor said the proposed transaction could exclude Afgri but at this point no decision had been made.
"We are evaluating all the alternatives and we are earnestly seeking the outcome that best suits the shareholders. In the event that our offer is rejected we may indeed be co-shareholders with Afgri in Sovereign," he said.
Taylor said Country Bird's interest in Sovereign was based on its strategy to expand its geographical footprint, noting that both companies already used the same breed of bird, had diverse markets which would fit well together and could achieve economies of scale and become more competitive.