SA management considers buying the largest African feedlot valued at US$450m

SOUTH AFRICA – The management of the largest cattle feedlot in the continent, Karan Beef (Pty) Ltd is planning to acquire part or all of the firm from its owner Ivor Karan in a deal that values it at US$450 million, according to people familiar with the matter.

An article by Bloomberg revealed that Karan Beef’s management may consider approaching the Public Investment Corporation (PIC), a public investment entity to help it with funding.

The people said depending on the funding available, the management will acquire either part or all of the company founded by the Karan family in 1974.

Though it started with less than 100 head of cattle, the firm currently owns about 150,000 herd of cattle, has bought three adjoining farms, an abattoir and a distribution center.

According to the Organisation for Economic Co-operation and Development, South Africa was the largest consumer of beef in Sub-Saharan Africa in 2017 and the fourteenth biggest in the world.

The data showed that in the year, SA’s 55-million people consumed 869,400 tonnes of beef compared to 12-million tonnes in the US.

‘Price fixing’ inquiry

In June last year, the Competition Commission launched an investigation into allegations of price fixing in the beef industry.

After being raided by the commission, the company in response said they had fully co-operated with the commission’s investigation and provided all the documents and information that they required.

The company refuted allegations that there was a collusion to fix prices either in the purchase of weaner calves‚ or in the sale of our beef products.

In a statement the Karan Beef said, “We pride ourselves on a business that was built on fair and ethical business practices.

The trust of our suppliers and our customers is of great importance to Karan Beef. Ultimately supply and demand determines the price of weaner calves and beef products.”

“I am surprised that the Competition Commission initiated this investigation.

I don’t believe that there is any collusion to fix prices either in the purchase of weaner calves, or in the sale of our beef products,” said Arnold Pretorius, CEO of Karan Beef.

If anything, Karan Beef is in fierce competition with other producers in the beef industry implicated in this investigation.”

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