Country Bird Holdings (CBH), which was once listed on the JSE, might have feathered its nest at a bargain price with the purchase of a dominant stake in poultry, animal feeds and egg business Quantum Foods.
At first glance PSG-aligned agribusiness investor Zeder scored a decent premium over Quantum’s recent market price when relinquishing its holding of nearly 62-million shares. But it is worth pointing out that Quantum — at its last financial report — stated its net asset value (NAV) at 962c a share.
Of course, Zeder — which will have about R1.35bn cash on hand after the Quantum sale — has much bigger furrows to plough in an ongoing effort to unlock value. Quantum was an investment that Zeder “inherited” from Pioneer Foods (recently sold to PepsiCo) and was never really considered a core investment.
Still, shareholder activist Chris Logan reckons Zeder might have pushed for a higher exit price considering that the Quantum stake could be of huge strategic value to CBH.
Quantum supplies a heap of poultry to the JSE’s “big bird”, Astral Foods, as well as unlisted Sovereign Food Investments, which CBH famously tilted at in an acrimonious (and prolonged) takeover battle some years ago.
One has to ask whether Quantum — under the influence of CBH — will renew these supply arrangements when the existing contracts expire.
Logan says the Quantum sale is reminiscent of Zeder’s thwarted sale of its liquor group, KWV, to Pioneer Foods almost 10 years ago at a massive discount to NAV.
The “never mind the NAV” hardly seemed applicable when drinks industry maestro Viv Imerman bought KWV in 2016 from subsequent owner Hosken Consolidated Investments (HCI) at full NAV.
The difference between a mining company and one which is involved in exploration and potentially finding a buyer for its finds was starkly laid out when Impala Platinum (Implats) decided to cool its heels on a Canadian company’s project.
Canada’s Platinum Group Metals (PTM) has a majority stake in the Waterberg deposit in Limpopo.
To PTM’s credit it found platinum group metals (PGMs) and base metal deposits in a northern extension to the Northern Limb of the Bushveld Igneous Complex where there was doubt about mineralisation.
PTM hasn’t been shy about flagging the deposit. On its website it says it is “advancing the next great palladium mine”.
PTM and its shareholders have burnt their fingers very badly once trying to build a mine and concentrator. The Maseve mine and concentrator did not come close to the potential management had spoken about and it was sold to Royal Bafokeng Platinum, which was delighted at the bargain it picked up and improved the operating model and economics of its neighbouring Styldrift mine.
The deposit attracted the interest of Implats, a sector heavyweight which has built mines and plants over decades. It must have come as a great relief to PTM shareholders that a company with such a pedigree was getting involved.
Fast forward 20 months and Implats has cooled its view of Waterberg to the point that it will not invest further in the prospect to raise its stake past 50%. It will keep the 15% stake it already owns in the venture and retain its first right of refusal to acquire concentrate coming from the mine if and when it is in production.
Implats says that it has other commitments for its balance sheet and that the market for PGMs is difficult to read so it is unwilling to make a large financial outlay on a brand new mine and bring additional metal into production.
PTM has to line up a fresh partner or bring the mine to account on its own. For the PGMs market, this is unlikely to be a new source of metal any time soon.
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