Zambeef, one of the largest agribusinesses in Zambia, has sold a 49% stake in Zam Chick to the South African-based chicken processing company Rainbow Chicken for US$14.25m as part of a “strategic partnership”.
According to the terms of the partnership, Zam Chick will benefit from the “expertise and customer relationships” of Rainbow Chick, which processes 4m chickens each week and is the main supplier of chicken in Sub Saharan Africa.
“We believe that the partnership agreement should provide Zam Chick with the expertise to increase the amount of higher value-added chicken products it produces as well as expanding its customer base. Rainbow Chicken itself is c.74% subsidiary of Remgro – a US$7bn South African investment company – which we feel reinforces our view that Zambeef and its management are increasingly being seen as one of the ‘go to’ partners in the region,” Zambeef said.
Zambeef also explained that there were likely to be “significant opportunities” to build on its current forecasts for the chicken business. However, it added that it would maintain its current forecast until there was a clearer understanding of the “exact nature” of the opportunities. As such, it forecast profit before tax (PBT) for the business to rise by 40% to US$19m in the full year ending 2013.
Of its business as a whole, Zambeef revealed a positive performance of its shares, which have risen by 25% this year and therefore outperformed the UK market by 16%.
The last two years have seen the company scale-up capacity on a large scale across all sectors, which a Zambeef statement said was to keep pace with strong demand for its key products.
According to the company, Zambian gross domestic product is forecast to increase to 8.2% this year and the company is also expecting a 9% rise in GDP/capita to US$1,622. Zambeef said that such growth will ensure strong consumer demand for its products.