Four bidders shortlisted for Daybreak poultry partnership as turnaround gains momentum

Daybreak Foods has shortlisted four potential strategic equity partners as part of its business rescue process, a sign of growing confidence in the poultry producer’s turnaround under the Public Investment Corporation’s ownership.

Transaction advisor Park Village Auctions confirmed that the shortlisted bidders are now working through due diligence, covering virtual data room reviews, on-site inspections, and detailed sessions with management and the business rescue team.

On the operational side, Daybreak reported progress in stabilising its hatchery and breeder operations, with three sites repopulated in August and September. Production is on track to reach 1.5 million day-old chicks a month by March 2026.

Senior business rescue practitioner Tebogo Maoto said the R150 million injection already provided by the PIC underpins the rescue plan, but that additional funding is still needed to carry the company through its critical reactivation phase.

According to Maoto, the main criteria for choosing a winning partner are the scale of capital they can bring and a demonstrated track record in turning businesses around, along with relevant poultry sector experience and transformation credentials. The BRPs are said to favour proposals to acquire or partner with Daybreak as a single entity rather than splitting it into separate divisions.

Regulatory compliance is also central to the process, Maoto said, with any investor needing to satisfy both Competition Commission requirements and the Public Finance Management Act given the PIC’s position as majority shareholder. Whoever is selected is expected to take an active role in governance and operations, making a firm commitment to retaining staff an important part of how proposals are being judged.

Even so, Maoto acknowledged that some retrenchments will be unavoidable as the company moves into its reactivation phase, though staff contracts remain protected under the Companies Act in the meantime. Formal retrenchment processes are on hold pending an outcome from the Temporary Employer/Employee Relief Scheme, and Maoto said the business rescue team continues to engage with government, unions and employee representatives to keep job losses to a minimum and manage the process openly.

On the asset side, Park Village Auctions said the sale of the non-core Howick property and hatchery had achieved its aims, with the proceeds set aside for working capital and operational needs once creditors sign off. Maoto said further disposals could follow in later phases of the rescue process.

Relations with creditors and suppliers have stayed stable following the near-unanimous approval of the rescue plan, though Daybreak’s broader push to rebuild confidence in the market and its supply chain will only get underway once the reactivation phase begins. Maoto described the process as being closely watched as a test of how turnarounds can work in South African agribusiness, with stakeholders hoping for an outcome that benefits the company, its employees and the food supply chain more broadly.

Speaking to Parliament’s Portfolio Committee on Finance, PIC chief executive Deon Botha said Daybreak’s cash flow position had improved markedly, with R73 million still available from the R150 million initially set aside for the turnaround. He also said concerns previously raised by the NSPCA had been resolved, with all birds now vaccinated.

Botha told the committee that the reactivation plan has been approved by creditors, that work is underway to bring the Sundra abattoir back online, and that the company is pursuing an additional R300 million to fund the reactivation process. He said the search for a strategic partner is proceeding in parallel, with submissions currently under review and a decision expected around late January or early February.