Rainbow Chicken shares soar 35% after offer is announced

South African investment holding company Remgro yesterday announced an offer to buy the 38percent minority shareholding in poultry producer Rainbow Chickens that it did not own for about R1,72 billion, which sent Rainbow shares up a whopping 35percent.

South African investment holding company Remgro yesterday announced an offer to buy the 38percent minority shareholding in poultry producer Rainbow Chickens that it did not own for about R1,72 billion, which sent Rainbow shares up a whopping 35percent.

The offer is for R16 a Rainbow share or 9 Remgro shares for every 100 shares in Rainbow, which values Rainbow at R4,5billion.

Remgro said that the offer was at a 36percent premium to the closing share price of Rainbow on March 20.

Thys Visser, Remgro chief executive, said: "We believe Rainbow will be more successful as an unlisted company because it will be better able to manage the volatile external factors affecting the business and its capital can be more efficiently structured. Shareholders can elect to take cash or continue to share indirectly in the future prospects of Rainbow by taking up the Remgro share alternative."

Remgro said that the Rainbow board would appoint independent experts to help it when considering the offer.

If the offer is accepted by shareholders, Rainbow will be delisted from the JSE on June 19.

Most market analysts expect shareholders to be happy with the offer, but there could be some resistance from professional investors who have identified the chicken business as a long-term growth area, according to Fin24. - I-Net Bridge with Reuters

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