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JSE LIMITED - CBH offer to acquire the entire ordinary share capital of Sovereign Food Investments Limited that it or its concert

Release Date: 06/07/2016 17:05
Code(s): JSER     PDF:  
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CBH offer to acquire the entire ordinary share capital of Sovereign Food Investments Limited that it or its concert

Country Bird Holdings Proprietary Limited
Incorporated in the Republic of South Africa
(Registration number 2005/008505/07)
 (“CBH”)




 CBH OFFER TO ACQUIRE THE ENTIRE ORDINARY SHARE CAPITAL OF SOVEREIGN FOOD
 INVESTMENTS LIMITED THAT IT OR ITS CONCERT PARTIES DO NOT ALREADY OWN



1. INTRODUCTION

   Sovereign Food Investments Limited (“Sovereign”) shareholders (“Sovereign Shareholders”) are
   advised that CBH hereby makes a conditional cash offer to acquire the entire ordinary share capital
   of Sovereign other than those ordinary shares already held by CBH and its concert parties and other
   than the ordinary shares held by Sovereign’s subsidiaries (“Offer Shares”) for a cash consideration
   of R9.00 per Sovereign ordinary share (“Sovereign Share”) cum any dividends paid from the date
   of this announcement (“the Offer”). The Offer is proposed in terms of s117(1)(c)(v) of the Companies
   Act 71 of 2008, as amended (“Companies Act”) and is conditional upon the fulfilment of the
   conditions precedent set out in paragraphs 3 and 4 below.

2. PRINCIPAL TERMS OF THE OFFER

   The principal terms and conditions of the Offer, which will be set out in a circular to Sovereign
   Shareholders (“Offer Circular”) to be posted to Sovereign Shareholders on or about Monday, 11
   July 2016 will include the following:
       i.  CBH offers to purchase the Offer Shares or such lesser number of Offer Shares in respect
           of which the Offer is accepted, such that CBH, together with its concert parties, holds at
           least 50.0% plus 1 Sovereign Share of the total issued share capital of Sovereign (including
           treasury shares) following the conclusion of the Offer;
      ii.  The purchase consideration will be R9.00, cum any dividends paid from the date of this
           announcement, in cash for each Offer Share (“Offer Price”) which will be payable in terms
           of the rules and regulations of the Takeover Regulation Panel, established in terms of the
           Companies Act (“Takeover Panel”), following the date on which the Offer becomes
           unconditional, against acceptance by the Sovereign Shareholders of the Offer, and where
           applicable, delivery to CBH of a duly completed and signed form of acceptance of the Offer;
     iii.  The posting of the Offer Circular will be subject to fulfilment of the condition precedent set
           out in paragraph 3 below; and
    iv.    The Offer will be subject to fulfilment of the conditions precedent set out in paragraph 4
           below.

3. CONDITIONS PRECEDENT TO THE POSTING OF THE OFFER CIRCULAR

   The posting of the Offer Circular will be subject to the fulfilment of the requisite approvals being
   received from the Takeover Panel for the posting of the Offer Circular.

4. CONDITIONS PRECEDENT

   The Offer is subject to the following conditions precedent:
      i.  the approval by the relevant competition authorities of CBH acquiring control of Sovereign;
     ii.  Sovereign and the Sovereign Shareholders not implementing a transaction or similar
          transactions in any form as contemplated in the circulars issued by Sovereign to
          Shareholders dated 11 December 2015, 24 February 2016 and 22 June 2016;
    iii.  The Offer will only become unconditional once sufficient acceptances have been received
          from Shareholders such that CBH, together with its concert parties, will hold at least 50.0%
           plus 1 of the total issued share capital of Sovereign (including treasury shares) after the
           implementation of the Offer; and
    iv.    The receipt of the necessary approvals from the Takeover Panel.


5. RATIONALE FOR ACCEPTANCE OF THE OFFER

   The Offer is beneficial for Sovereign Shareholders for the following reasons:
      i.  The Offer Price represents a premium of 25.4% and 21.9% to the current share price and
          the 30 day volume weighted average price as at close of business on 5 July 2016
          respectively;
     ii.  The Offer Price represents a premium of between 21.3% and 12.8% to the fair value of
          between R7.42 and R7.98 determined by the independent expert appointed by Sovereign’s
          board of directors and disclosed in its circular sent to Sovereign Shareholders on 24 June
          2016;
    iii.  Given the current drought, the rising prices of maize and other input costs, changes in brining
          regulations and record levels of dumped chicken portions into the SA market, the Offer
          provides Shareholders with an opportunity to divest of their Shares at an attractive premium;
    iv.   For CBH, the Offer represents an opportunity to increase its operating footprint, particularly
          in the Eastern Cape in which it is currently under represented; and
     v.   The Offer allows CBH to gain scale and a more sustainable product mix and gives CBH an
          enhanced ability to sell further processed and fully cooked solutions, including into the quick
          service restaurant segment and export markets.

6. PAYMENT OF THE OFFER CONSIDERATION AND GUARANTEE

   CBH confirms that it has sufficient cash resources and/or facilities to satisfy, in full, the Offer
   consideration, and the Takeover Panel has been furnished with irrevocable unconditional
   guarantees in compliance with Companies Regulations 111(4) and (5) from the Land and Agricultural
   Development Bank of South Africa and Investec Bank Limited in this regard.

7. SALIENT DATES AND TIMES

                                                                                                       2016
    Firm intention announcement distributed to Sovereign                             Wednesday, 6 July 2016
    Shareholders on SENS on
    Firm intention published in the South African press on                              Thursday, 7 July 2016
    Circular posted to Sovereign Shareholders on                                        Monday, 11 July 2016
    Opening date of the Offer at 09:00 on                                               Monday, 11 July 2016
    Expected closing date of the Offer by 12:00 (“Closing Date”)                                   See note 3
    Final payment of the offer consideration paid to Sovereign                                     See note 4
    Shareholders who elect to accept the Offer

   Notes:
       1) The above dates and times are subject to amendment provided such amendments are approved by
          the Takeover Panel. Any such change will be announced in the South African press.
       2) All times indicated above are South African times.
       3) The Closing Date will be 10 business days after the date on which the last of the conditions precedent
          set out in paragraph 4 are fulfilled.
       4) Payment of the Offer consideration will be made within six business days of the later of the transaction
          becoming unconditional or the date on which such Sovereign Shareholders deliver their form of
          acceptance, surrender and transfer and documents of title to the transfer secretaries.

8. INTERESTS OF CBH AND ITS CONCERT PARTIES

   CBH and its concert parties currently hold 7 430 173 Shares in Sovereign, constituting approximately
   9.75% of the issued share capital of Sovereign (including treasury shares).
    Concert party                                              Number of shares                 % Holding
    Synapp International Limited                                     3 659 944                      4.8%
    (Registration number 403737)
    Buzby Trust                                                          2 020 085                    2.7%
    (South African Masters’ Reference Number: IT
    11989/2005)
    Country Bird Holdings Proprietary Limited                            1 074 177                    1.4%
    (South       African      Registration    Number:
    2005/008505/07)
    Mr Colin Rodney James                                                  391 500                    0.5%
    (South African Identity Number 800530 5910 086)
    Ms Marielle Colette Regine Lecluse                                     284 467                    0.4%
    (South African Identity Number: 650921 0878 181)
    Total                                                                7 430 173                    9.8%

9. NO SET-OFF OF OFFER CONSIDERATION

   Settlement of the Offer Price pursuant to the Offer will be implemented in accordance with the terms
   of the Offer without regard to any lien, right of set-off, counterclaim, deduction, withholding or other
   analogous right to which CBH may otherwise be, or claim to be, entitled against any Sovereign
   Shareholder.

10. POSTING OF THE OFFER CIRCULAR

   Full details of the Offer will be included in the Offer Circular which will contain, inter alia, the terms
   of the Offer and a form of acceptance, surrender and transfer for use by certificated Sovereign
   Shareholders. It is expected that the Offer Circular will be posted on or about Monday, 11 July 2016
   and the Offer is expected to open for acceptance from 09:00 on or about Monday, 11 July 2016 with
   the initial Closing Date expected to be 10 business days after the date on which the last of the
   conditions precedent set out in paragraph 4 is fulfilled.

11. TERMINATION OF THE SOVEREIGN LISTING

   Following implementation of the Offer and should CBH obtain 100% of the Sovereign Shares,
   application will be made to the JSE Limited (“JSE”) to terminate the listing of Sovereign Shares on
   the JSE.

12. OFFER NOT MADE WHERE UNLAWFUL

   The Offer shall not constitute an offer to purchase or the solicitation of an offer to sell any Offer
   Shares in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to the
   registration or qualification under the laws of such jurisdiction.

13. RESPONSIBILITY STATEMENT

   CBH accepts responsibility for the information contained in this announcement. To the best of its
   respective knowledge and belief, the information contained in this announcement is true and nothing
   has been omitted which is likely to affect the import of the information.
  Johannesburg
  06 July 2016


Investment Bank: Investec Bank Limited

Legal advisors: Kern & Partners

Competition law advisors: Bowman Gilfillan

Date: 06/07/2016 05:05:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE'). 
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
 the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct, 
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
 information disseminated through SENS.

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