10 Sep 2013 Pioneer announces unbundling of Quantum Foods division

The proposal was announced last week, only a day after agricultural conglomerate Afgri disclosed devastating losses from its poultry business and warned of a crisis in the local chicken industry.

Pioneer financial director, Leon Cronjé, said the unbundling and separate listing of Quantum – subject to “any other acceptable corporate action” – would happen in the next 12 months.

The reference to corporate action is intriguing since ongoing market speculation has matched Quantum with Afgri’s poultry division.

Asked whether any corporate action might transpire prior to the unbundling and separate listing‚ Cronjé would only say that “12 months is a long time”.

Quantum would be treated as an “asset-held-for-sale” with Cronjé saying that from next month the business would be ring fenced as a separate legal entity.

The unbundling is largely seen as the first strategic shift at Pioneer since former Tiger Brands executive‚ Phil Roux‚ took the reins as CEO.

Market commentators have noted that Roux is probably more comfortable building on Pioneer’s branded business segments – which include Sasko (bread) and Bokomo (cereals).

Initial market reaction to Pioneer’s proposals were cynical‚ with some market watchers suggesting the move was a desperate capitulation from the profit-plucked poultry sector.

In the year to end March 2013‚ Quantum managed to hike revenue 16% to R1.8bn but operating profits slumped R33m into the red. Chicken accounted for 37% of revenue and eggs another 23%.

This is not the first time a food brands conglomerate has unbundled a poultry business. Tiger Brands unbundled Astral Foods in 2001‚ a move that unlocked huge value for longer-term shareholders.