Fishing group Sea Harvest to acquire Ladismith Cheese Company for US$36m

SOUTH AFRICA – Fishing Group Sea Harvest plans to diversify its food products portfolio by acquiring a value-adding dairy processing company, Ladismith Cheese for US$36.81 million.

With the acquisition, Sea Harvest seeks to boost its local dairy segment which has seen recent investments including development and acquisition of additional dairy and allied beverage products.

“Ladismith Cheese exhibits strong fundamentals. It is a profitable, branded fast moving consumer goods food manufacturer of significant scale in the food and agricultural sector.

It has a long track record, strong national brand and a proven management team.

In our opinion, the dairy sector is expected to experience continued growing demand for cheese and butter in response to consumer dietary changes towards natural fat products,” said Sea Harvest Group CEO, Felix Ratheb.

He added that that the dairy sector was expected to see growing demand for cheese and butter as consumer dietary habits changed towards natural fat products.

“It’s not that different from fishing. Both companies are involved in processing, and we understand flow lines and yields.

The customers are also similar,” he said.

Ladismith Cheese produces and distributes cheese, butter and milk powders to the South African retail, wholesale and food service markets.

According to the company, it produced 9,000 tons of cheese and butter and 7,500 tons of dairy and non-dairy powder to generate US$47.46 million in revenue and R58m in after tax profits for the financial year to January 2018.

Opts to diversify

Addition of the dairy brand on its product line highlights the company’s continued focus to build its food sector business.

It first diversified by distributing frozen vegetarian and vegan meals while its Australian seafood subsidiary Mareterram is also involved in food distribution outside of the fishing sector.

Among other factors, market insights reveal Sea Harvest’s move to further spread its catch in new food lines was influenced by limited opportunities in the fast consolidating local fishing sector.

Ratheb said the Ladismith Cheese acquisition formed part of the fishing group’s strategy to grow organically through additional volumes and margin enhancement.

The fishing company further added it would pursue acquisitions in complementary sectors of the South African food and agricultural industries, especially those segments exhibiting strong fundamentals and growth that would allow the group to leverage its core competencies and strengths.

The proposed Ladismith deal will be settled in cash and Sea Harvest intends undertaking a vendor placement of up to US$20.85 million worth of its shares with majority shareholder Brimstone to part fund the transaction.

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