SOUTH AFRICA – South African Competition Commission has given the green light to the sale of Tomis Group, a prominent meat supplier, to the retail giant Pick n Pay.
Valued at US$18,07 million the acquisition is poised to transform Pick n Pay’s fresh meat offerings and explore its potential to bring about innovative, value-added products for its customers.
In this move, Tomis Group, can now proceed with the sale, transferring ownership of the feedlot, abattoir, and a meat processing facility to Pick n Pay.
According to Pick n Pay, meat is a vital component of the company’s customer value proposition, and the acquisition is expected to bolster its position in the market.
In a statement, the retail giant expressed optimism about the acquisition, emphasizing its commitment to delivering higher-quality, consistent red meat to its customers
“Additionally, this acquisition holds the promise of cost reduction within the red meat supply chain,” Pick n Pay said.
“By eliminating the middleman, we also aim to streamline operations and potentially pass on these cost savings to consumers. However, the extent of these savings reaching consumers remains uncertain.”
The Competition Commission’s decision received general approval from industry stakeholders, who concurred that the transaction was unlikely to have a substantial impact on market competition.
Gerhard Neethling, CEO of the Red Meat Abattoir Association, highlighted that the vertically integrated nature of the industry minimized concerns about competition.
“Whether the services of the abattoir are delivered for a retailer or if the retailer owns the abattoir does not affect competition in the market,” he said.
Gerhard van der Burgh, a senior analyst at the Bureau for Food and Agricultural Policy, welcomed the move, emphasizing the importance of bringing the retail sector closer to the value chain.
He noted that the integration would provide valuable insights into the challenges faced by producers at the start of the value chain.
Meanwhile, Pick n Pay is obligated to make specific capital investments and increase procurement spend with historically disadvantaged suppliers, underscoring its commitment to broader social and economic goals.
As Pick n Pay prepares to take the reins of Tomis Group, the South African meat industry anticipates a seamless transition that promises benefits for both the retail giant and its customers.
As the acquisition may not trigger immediate market disruptions, it sets the stage for enhanced offerings and a closer look at the intricacies of the meat supply chain.