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Country Bird Looks Further Afield on Acquisition Trail

by 5m Editor
21 October 2009, at 9:39am

SOUTH AFRICA - Poultry company, Country Bird, has announced it is looking to expand into other countries in southern Africa.

Acquisitive poultry group, Country Bird, has plans to expand into other parts of southern Africa and wanted to increase its domestic market share through a possible acquisition as it moves to within spitting distance of larger competitors Rainbow and Astral Foods.

South Africa's Business Day reports that the firm, South Africa's third-largest poultry company, has already snapped up a 22.8 per cent stake in Sovereign Foods and has in the past not ruled out making an outright offer for the junior foods company. Sovereign yesterday launched a rights issue to raise 144.5 million rand (ZAR) to pay debts and strengthen its balance sheet.

Country Bird has a market share of about 10 per cent, which financial director, Robbie Taylor, said could rise to 18 per cent if the company succeeded in acquiring Sovereign Foods. Rainbow and Astral are each estimated to hold 26 to 28 per cent of the market.

Mr Taylor was bullish about the company's march towards market dominance in the region, saying the potential to earn money for shareholders was high, given the untapped demand for poultry products. In addition to the existing market, there were people in the region who had never considered poultry as an alternative source of protein, mainly due to affordability, but this was changing, opening doors for the company to exploit.

"The next big step for us is to continue (expanding) into Africa," Mr Taylor told Business Day, conceding that it was not easy operating in some African markets but that the potential rewards far outweighed the risks.

Country Bird was already firmly established in Botswana and Zambia, and had a one-year operation supplying frozen chicken products to Namibia, where it might eventually establish a fully integrated poultry business.

Other markets on the radar screen were Mozambique, Tanzania and Zimbabwe, a country Mr Taylor said held the greatest potential once the political and economic climate had stabilised.

Last week, Shoprite ditched plans to acquire Zimbabwe's largest supermarket chain, citing uncertainty about the country's future.

"Zimbabwe is a place we are keen on if the political and economic environment becomes more attractive," Mr Taylor.

Namibia was equally promising, he said, because its poultry sector was relatively underdeveloped. Country Bird had been impressed with the performance of its retail operation there so far.

"There is a big market there, but for now we have been supplying from our local operation, Supreme. But once we are assured of a steady supply of maize, we will consider an integrated operation in that country," Mr Taylor said.

The company has been busy in South Africa, spending ZAR124 million in the financial year just ended to acquire the 50% it did not own in feeds supply firm Nutri Feeds, and also building its stake in Sovereign Foods.

Business Day reports that Country Bird has also established a red-meat processing plant in Klerksdorp. Mr Taylor said that was part of a strategy to replicate model US poultry firms. These integrated poultry and red meat operations to take advantage of cost savings and synergies from sharing distribution channels.