The largest poultry producer in South Africa, Rainbow Chicken Ltd, has entered into an agreement to purchase an additional 23.9% share in New Foodcorp Holdings Pty Ltd. The move is designed to expand the product range of Rainbow Chicken.

The said transaction is worth 393 million rand or US$40 million and would increase the stake of the Durban based Rainbow Chicken's shareholdings in Foodcorp. Foodcorp for its part, owns such known brands as Glenryck canned fish and Nola mayonnaise. Rainbow's new shareholdings now amount to 88.1% overall.

In a statement, Foodcorp said that it would help 'counter the cyclical nature of the chicken industry.' The company reported last February that its first half earnings had declined by 75% because of increasing import volumes, high costs as well as the erosion of margin due to oversupply in domestic markets.

Initially, Rainbow had acquired 64.2% of Foodcorp last April using Capitau Investment Management Pty as its representative.