SOUTH AFRICA – Libstar, one of South Africa’s leading Consumer Packaged Goods (CPG) manufacturers and distributors, has concluded an agreement to acquire Cape Foods, a herb, seasoning and spice manufacturer.
The group did not reveal the value of the deal, explaining that the acquisition falls below the threshold for categorisation in terms of the JSE’s listings requirements.
However, it noted that the transaction forms part of its strategy to grow its basket of non-commoditised food products in existing categories, and will expand its access to new markets and value-added products in the dry condiments category.
The facilities of Cape Foods, which has been in operation since 2002, are accredited locally and internationally by, inter alia, the British Retail Consortium, Business Social Compliance Initiative and United States Food and Drug Administration.
Its product range is marketed for sale to retailers and distributors both locally and internationally in more than 30 countries.
The deal announcement, which is expected to be finalized by end of November, follows the recent launch of its own incubator hub dubbed Libstar Nova, set to discover new businesses that are ripe for investment and that will cater to the changing landscape of the industry.
Its first acquisition under the hub was of a frozen baby food manufacturer called Umatie concluded in January.
The maker of Denny Mushrooms and Lancewood dairy continues to reposition its portfolio toward higher-margin food categories, with the exit from its household and personal care (HPC) businesses, allowing it to focus more on these core businesses.
The packaged goods manufacturer in a trading update has highlighted it has experienced another period of supply chain disruptions, significant cost inflation and consumer pressures in the six months ended June 30.
The group expects to report an increase of between 3.6% and 5.6% for its normalised earnings before interest, taxation, depreciation, and amortisation (Ebitda) from ongoing operations.
It anticipates an increase from continuing operations of between 11.5% and 16.7% in normalised headline earnings per share (Heps) to between 34.8 cents to 36.4 cents.
Libstar has reported a 9.6% increase in revenue across all categories during the period under review, with volume sales growing 6.9% due to increased volumes of hard cheese from its Lancewood unit (perishable category), and sauces, vinegars and other condiments (groceries category).
“Groceries category volumes increased year-on-year despite lower export volumes of value-added herbs and spices due to ongoing shipping delays,” it adds.
Libstar says its gross profit margins were largely in line with the prior comparative period despite significant raw material and energy cost inflation.