| Tue 4 Apr 2006, 15:38 | | Agri Limited - Competition Authorities Approve Afg |
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Agri Limited - Competition Authorities Approve Afgri"s Acquisition Of Daybreak
AGRI LIMITED
(Incorporated in the Republic of South Africa)
Registration number: 1995/004030/06
Share Code: AFR
(ISIN: ZAE000040549)
("AFGRI" or "the Company")
COMPETITION AUTHORITIES APPROVE AFGRI"S ACQUISITION OF DAYBREAK
The Competition Commission has approved the acquisition of 100% of Daybreak
Farms by JSE-listed agri business Afgri Limited.
This paves the way for the finalisation of the transaction, which was first
announced in November last year. CEO of Afgri Products, Louis Wolthers, says the
Daybreak acquisition marks Afgri"s re-entry to the broiler business at a cost of
R110 million.
Afgri"s previous involvement in the broiler business came to an end in 2004 when
it sold its 50% interest in Early Bird Farm due to shareholder agreement
restrictions and conflicts of interest with its partner Astral. At the time
Afgri announced its intention to re-enter the broiler business when a suitable
opportunity arose. In terms of its agreement with Astral to sell Early Bird
Farm, Afgri negotiated a 10-year feed supply agreement with Early Bird Farm to
allow it time to develop its broiler strategy.
"Daybreak is a well run business with an excellent market position and promising
growth potential," says Wolthers. "Gary Taylor will continue to run the business
and expand it in line with Afgri"s strategy, to take advantage of the strong
growth in the broiler industry."
Wolthers adds that the broiler industry constitutes 40% of the South African
protein market and 50% of animal feed consumed in the country. "There is a
natural synergy between Daybreak and our existing feed business. Competitiveness
in this industry depends to a large degree on the ability to vertically
integrate broiler and feed businesses, something we are now in a position to do,
similar to Rainbow and Astral."
Daybreak is the fourth largest broiler producer in South Africa, with a capacity
of 600 000 birds per week. Afgri plans to increase production in the short-term,
with little additional capital required. Afgri"s objective is to become the
third largest producer in the country, following expansion of the abattoir near
Springs, east of Johannesburg, and the hatching facilities near Bela-Bela, north
of Pretoria.
There is still plenty growth in the broiler market, says Wolthers. "As income
levels rise, there is a tendency to switch to chicken as a form of protein and
we will be well positioned to meet this demand."
The Avian bird flu crisis, and the subsequent slaughter of millions of birds in
Asia and elsewhere, has reduced the pressure of imported product on the South
African market. The Asian bird flu crisis spread as a result of intermingling
between wild and domestic bird populations. The chances of this happening in
South Africa are vastly reduced due to better environmental and bio-safety
controls. These controls have been tightened in recent years to withstand the
spread of disease. Daybreak"s facilities are spread over a relatively wide area
with a low poultry population, which further reduces the chances of spreading
disease.
In conclusion Wolthers reiterates: "Our re-entry to the broiler business is
important to Afgri"s growth strategy, and Daybreak is an excellent and well run
operation that complements our existing feed businesses."
Ends
About AFGRI
Afgri is South Africa"s leading agricultural services group, with operations in
South Africa, southern Africa and Australia.
Listed on the JSE Limited, Afgri"s business success is vested in providing
world-class full-spectrum service to targeted producers, processors and
consumers of agricultural products and services, as well as adding long-term
value to shareholders.
Afgri"s business is housed in three business pillars: Products, Logistics &
Financial Services and Producer Services.
ISSUED FOR AFGRI LIMITED
CONTACT Louis Wolthers 011 549 0601 / 082 451 6313
FAX NO 011 463 4139
E-MAIL lwolthers@afgri.co.za
WEBSITE www.afgri.co.za
ISSUED BY TISH STEWART PR ASSOCIATES
CONTACT Tish Stewart 011 325 4195 / 082 443 6399
FAX NO 011 325 4199
E-MAIL tish@tspr.co.za
DATE 04 April 2006
Date: 04/04/2006 03:38:24 PM Produced by the JSE SENS Department
