Johannesburg - Rhodes Food Group announced yesterday that it planned to acquire 100 percent of Durban-based food producer Pakco for R200 million, making Pakco its seventh acquisition since the food producer listed on the JSE in 2014.
Rhodes Food has already spent R690m on acquisitions, excluding Pakco, in the past two years.
Rhodes Food chief executive Bruce Henderson said: “The acquisition is aligned with our strategy of expanding into adjacent product categories and will allow us to gain entry into the dry packed foods market. Pakco produces branded and private label ranges of spices, condiments, instant meals and desserts in dry packed, bottled and canned formats in its facility outside Durban.”
Henderson said the six acquisitions acquired before Pakco had all been successfully integrated into the group’s operations. Rhodes Food’s strategy was to complement organic growth by acquiring food producers, he said, which would enable the business to expand into new and complementary product categories and Pakco met that criteria.
“Our strategy is evident in the acquisition of Pacmar, which was the catalyst for our entry into the fruit juice market, while Boland Pulp facilitated our entry into the baby food market through the Squish brand.”
Rhodes Food reported a 54 percent in revenue to R2 billion in the six months to end March, while profit after tax was up 89 percent to R110m, during its half year results presentation in May.
Pakco generated moderate revenue of R221.5m and earnings before interest, tax, depreciation and amortisation (Ebitda) of R9.5m in its 2015 financial year.
Victor von Reiche, an equity analyst at Citadel, said the acquisition gave Rhodes Food exposure to dry-packed products and bulked up its position in canned foods.
“Management has embarked on a strategy of acquiring assets, which will enhance the group’s reach into adjacent manufactured goods and this is a continuation of that trend.”
Rhodes Food’s share price has been on an upward curve since listing two years ago. It has gained 149.91 percent, moving from R11.10 a share to R27.74 a share.
Rhodes Food shares traded 2.41 percent higher yesterday and closed at R28.05 a share.
BUSINESS REPORT