Astral CFO Daan Ferreira fears that its supplier agreement with Quantum Foods is at risk
This comes after Zeder sold part of its stake in Quantum to Astral competitor, Country Bird Holdings.
Astral Foods has raised concerns around the sale of Zeder’s stake in Quantum Foods, fearing that it would fall into a competitor’s hands.
Astral, which is one of South Africa’s biggest chicken producers, acquired a 6.42 percent stake in Quantum Foods on 14 July. Every week for the past five years, Quantum has been providing Astral with 500,000 broiler chickens, making up 30 percent of Astral’s Western Cape production capacity.
Astral Foods CFO Daan Ferreira told Fin24 that the agreement between Astral and Quantum had initially experienced no hiccups, but that this had changed after Zeder sold its 30 percent of its stake to Astral’s competitor Country Bird Holdings.
He said that the greatest concern was Country Bird’s intention to become a controlling shareholder in Quantum, which would jeopardise the independence of its supplier contract with Astral.
“So the whole rationale from Astral’s point of view was to protect its vested interest in the supplier agreement,” Daan said.
He added that losing the agreement means Astral would have to begin a costly and time-consuming process of increasing capacity in its breeding and broiler operations.
“So that investment is huge because it’s new capital; we’d have to buy land and do environmental studies, and that takes time, so it could be a huge disruption for us if that supplier agreement is sacrificed.”
Zeder’s unloading of its Quantum shares also attracted interest from Luxembourg-based Silverlands II SCSp, which bought 32 percent shares in the company.