SOUTH AFRICA – Rhodes Food Group, one of the top listed food companies on Johannesburg Stock Exchange has said that it is in the process of concluding a deal to acquire RCL Foods’ protein snacking business for US$2.15 million.
The transaction which is subject to regulatory approval will see Rhodes Food integrate the yet to be acquired business into its ready meals operation in Groot Drakenstein.
RCL said RCL’s protein snacking business currently produces protein snack foods for Woolworths, and this would be an addition to its portfolio which comprises of meat pies, baby food and canned fruit.
“The business being acquired from RCL produces private-label protein-snack foods for Woolworths and will be integrated into RFG’s ready-meals facility.
The protein-snacking business is complementary to the snacking business acquired through Alibaba Foods in 2015.
The effective date of the transaction is expected to be 1 April, 2019,” said a Rhodes Food spokesperson.
The company made the announcement in the year-to-September results during which it grew turnover by 11.2% to US$366.01 million impacted by deteriorating trading conditions in South Africa and challenges in the international market.
International sales increased by 8.4% on the back of a strong recovery in export volumes in the second half of the year.
The company said the prolonged Western Cape drought had seen increased costs in canned fruits and a weak industrial fruit puree market had led to a US$358,811.35 loss in the international market.
Last year, Rhodes Food lined up US$25.5 million in investments in a drive to consolidate its operations including merging and moving its snacking business into its ready-meals segment to be located at Groot Drakenstein.
It also embarked on upgrading its existing facilities by expanding capacity at the firm’s pie and bakery facilities based in Gauteng, and the installation of clear base juice concentrate plant, also at Groot Drakenstein.
Its past acquisitions include food producer Pakco and pie maker Ma Baker and Alibaba Foods, a maker of eastern delicacies in February 2016.
The maker of Rhodes, Bull Brand, Magpie, Squish, Bisto, Hinds and Pakco brands now plans to put much focus on the regional business, which delivered a resilient performance despite increasing pressure on consumer disposable income.
Chief executive officer Bruce Henderson said the focus in the year ahead will be on driving organic growth, increasing brand shares and improving margins.
“Our major two-year capital investment programme is nearing completion and the group is well positioned to start generating returns on these assets,” said Henderson.