Feb. 4 (Bloomberg) -- Rainbow Chicken Ltd., South Africa’s largest chicken producer, agreed to buy a minority stake in Zam Chick Ltd. of Zambia as it expands in sub-Saharan Africa.
Rainbow will pay $14.5 million for 49 percent of Zambeef Plc’s Zam Chick, it said in a statement today. Zambeef will continue the daily management of the business, while Rainbow will provide technical assistance, it said. The stock fell 0.7 percent to 15.10 rand in Johannesburg trading at 9:55 a.m., after earlier rising as much as 4.4 percent.
The deal with Lusaka-based Zambeef, which also has operations in Ghana and Nigeria, opens the way for further cooperation between the companies, Rainbow said. Durban, South Africa-based Rainbow offered 1 billion rand ($113 million) for control of Foodcorp Holdings (Pty) Ltd., the country’s third-largest food producer, on Nov. 14 and plans to raise 3.9 billion rand selling stock to existing investors to fund the deals.
The Zam Chick purchase will be partly funded from a portion of the proceeds from the rights offer, it said.
Rainbow, 73.4 percent owned by Remgro Ltd., an investment company based in Stellenbosch near Cape Town, offered shareholders 80 securities for every 100 they own at 14.20 rand on Dec. 6. The offer is underwritten by Remgro and will be used to fund the takeover of closely held Foodcorp, which will increase Rainbow’s range to add items from peanut butter to dog food.
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