SOUTH AFRICA – Rhodes Food Group said on Wednesday it would buy a Western Cape fruit juice business for R165m, its first major acquisition since the company raised R600m when listing on the JSE in October last year. Rhodes spent the bulk of the capital it raised in a prelisting private placement on repaying debt, but said last year the proceeds of the capital raising would also be used to grow production capacity and pursue acquisitions.
Shares in the company rose 0.87% to R15.13 in thin trading on Wednesday after it said it had agreed to buy Wellington-based Pacmar from its shareholders for a total cash consideration of R165m. Rhodes’s stock has risen from R12 since listing just over three months ago.
Along with making jam, canned meats and fruits, and juice concentrates, the company owns brands that include pie brand Magpie and UK breakfast long-life fruit brand Trout Hall.
Rhodes exports to Europe, the Far East, Australasia, Russia, US, Canada and the Middle East. It has a presence in the retail private label sector, supplying Woolworths with ready meals and global retailers such as Waitrose and Tesco with canned fruit.
Pacmar manufactures and distributes fruit juice products in local, regional and international markets under various third-party brands, private label programmes and its own brands.
Pacmar’s products include fruit juices and other beverages including wine, with its own brands including Wilde, Amazing, Zing and Crystal Falls.
Pacmar’s earnings before interest, tax, depreciation and amortisation for its financial year through last July were R22.2m, from revenues of R368.8m.
Rhodes said the deal was aligned with its strategy “of expanding its business through lateral extensions into product categories adjacent to its current product ranges”.
With fruit plants in the Western Cape and Swaziland, Rhodes produced “an extensive range of fruit purees and juice concentrates which it sells to the international beverage industry”.
“The acquisition offers a significant opportunity to add further value to these products.”
Pieter Hanekom, who was the executive responsible for The Ceres Beverage Company for 13 years and who recently joined the Rhodes executive team, would, among other responsibilities, head the juice operation.
The acquisition is subject to conditions, including internal and regulatory approvals.