Johannesburg-listed Sovereign Food subsidiary Crown Chickens has moved to buy Tydstroom Abattoir, in Hartebeespoort, from Quantum Foods for R120-million.
In an update to shareholders, Sovereign said that, as part of the transaction, a long-term broiler supply agreement would be inked with Quantum for the supply of broiler birds to the abattoir, which produces fresh and frozen poultry products predominantly for the Gauteng market.
Sovereign planned to acquire the fixed assets and property of the abattoir, which had a single-shift production capacity of 250 000 birds a week, but not any working capital, liabilities, brands or other intangible assets.
The buyout would enable Sovereign to expand its production volumes by 28% to 1.15-million birds a week, as well as its geographical footprint, to meet growing customer demand.
Sovereign would finance the acquisition, which would be completed by November, through new facilities and cash resources.
The deal remained subject to conditions, including the necessary competition and regulatory approvals.