Key Points:
- South African food giant RCL Foods plans to list its Rainbow Chicken unit on the Johannesburg Stock Exchange by July.
- RCL shareholders will receive one Rainbow share for every RCL share they hold, unlocking value in the turnaround poultry unit.
- This move allows both RCL and Rainbow to focus on individual growth plans, with positive market reaction suggesting confidence in Rainbow’s future.
RCL Foods, a leading South African consumer goods and milling company backed by South Africa’s richest man Johann Rupert, has confirmed plans to unbundle its legacy Rainbow Chicken business for a separate listing on the Johannesburg Stock Exchange (JSE) main board by July 1.
The news, confirmed in a Sens update on Tuesday, lifted RCL shares nearly 4 percent by midday. This follows RCL’s March announcement of the planned spin-off, a strategic decision driven by confidence in its ability to operate independently and deliver long-term shareholder value. “This is the result of significant efforts by both management teams,” RCL noted, “underpinned by confidence in Rainbow’s ability to thrive as a standalone business.”
RCL Foods shareholders to get Rainbow Chicken shares
RCL Foods is 77 percent owned by Remgro, an investment holding company controlled by leading billionaire businessman, Johann Rupert. The company, known for brands such as Selati sugar, Ouma rusks, and Yum Yum peanut butter, has been undergoing a strategic review to assess the sustainability and value of its portfolio for shareholders.
The unbundling of its Rainbow Chicken business, approved by the RCL board on June 3, will involve an in-specie distribution of all Rainbow shares held by RCL — constituting 100 percent of its issued stock (890,296,405 ordinary shares with no par value) — to existing RCL shareholders. The ratio will be one Rainbow share for every RCL share held on the record date.
RCL Foods outlines progress in Rainbow Chicken turnaround
RCL’s latest group financial results for the six-month period ending December 2023 highlighted Rainbow’s progress in achieving its turnaround strategy. The business has implemented a sustainable operational framework aimed at restoring profitability across economic cycles.
While shareholder approval is not required under JSE listing requirements, the unbundling remains subject to approval by the South African Reserve Bank’s Financial Surveillance Department and the JSE itself.
This separate listing aligns with RCL’s strategy of focusing on core businesses and allowing each entity to pursue its individual growth trajectory. The positive market reaction suggests investor confidence in Rainbow Chicken’s standalone potential.
