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Why Afgri's Poultry Division Growth Was Clipped

by 5m Editor
3 September 2009, at 9:17am

SOUTH AFRICA - Afgri's CEO explains why the company's talks with Sovereign Foods ended earlier this year.

Afgri had ended talks with Sovereign Foods earlier this year because it did not want its chicken business to grow disproportionately bigger than the rest of the group, chief executive Chris Venter told Business Report of South Africa yesterday.

Afgri's poultry division produces 650,000 chickens a week, and the understanding is that a three way arrangement between Afgri, Sovereign Foods and Country Bird Holdings would produce more than three million birds a week, he said.

"We want to reposition our foods business, but have decided that we do not want our poultry division to produce that many," Mr Venter added.

Meanwhile Country Bird has upped its stake in Sovereign Foods from 13.4 per cent to 22 per cent, and has been issuing cautionary announcements about a deal since then.

Analysts suspect that Country Bird may want to take over Sovereign Foods, according to to Business Report.

John Thompson, an analyst at Investec Asset Management, believed a merger between Country Bird and Sovereign Foods would be a positive move and that a merged entity would represent approximately 10 per cent of the market share.

Further Reading

- Go to our previous news item on Afgri Group by clicking here.