Sovereign Foods’ plans to stave off a hostile bid from Country Bird Holdings (CBH) and implement a controversial empowerment scheme were dealt another blow as it emerged that another bloc of shareholders had abandoned the Sovereign board.

CBH announced on Monday afternoon that it had acquired 8.7% of Sovereign’s shares at an average price of R8.75 and that, together with concert parties, it now held 34.1% of Sovereign. There was no indication of who the seller was, though speculation points to one of the four main institutional shareholders: Prudential, Sanlam, Old Mutual, or RECM and Calibre (RAC).

To date, these investors have shown little interest in accepting CBH’s offer.

On Sunday CBH chairman Kevin James said he had held talks with some of Sovereign’s shareholders. "They seemed happy to sell to us," James said, without disclosing the identity of the shareholder or the volumes involved. James was responding to the Sovereign circular calling on shareholders to reject CBH’s "opportunistic" offer.

At an RAC shareholders’ meeting in July, CEO Piet Viljoen came out in support of the Sovereign board, saying he would back management until there was evidence it was incapable of running the business.

"We think Chris Coombes is doing a good job," Viljoen said. Poultry was a cyclical industry and Sovereign was developing a promising value-added business model to supply Spar supermarkets, he said.

On Friday, Sovereign’s independent directors said CBH’s offer of R9 a Sovereign share undervalued the upside of investments over the past 18 months.

CBH’s offer for 100% of Sovereign will become unconditional once it has received 50% plus one of Sovereign’s equity. But closure of the offer is conditional on the controversial empowerment transaction not being implemented. That deal requires the backing of 75% of the shareholders.