Bidcorp can tap $1.2 billion for acquisitions

Johannesburg - South Africa's Bid

Corporation (Bidcorp) can tap as much as $1.2 billion

for acquisitions, its finance chief said on Thursday, as the

firm reported a 20.6 percent rise in half-year profit.

Bidcorp, a food-service group that was spun out of Bidvest

last year, usually buys small firms it can bolt on to

its portfolio, which includes businesses in Europe, Britain and

Australasia.

"We would be comfortable with two times debt to EBITDA (core

earnings) on a conservative basis, so that's probably taking us

to 14 to 15 billion rand ($1.2 billion) or a billion pounds,"

CFO David Cleasby said in a conference call when asked how much

the firm can access to buy other firms.

Chief Executive Bernard Berson added that the most likely

targets would be family-owned firms or food-service groups held

by private equity firms.

"Food service is a highly fragmented market," said Berson.

Bidcorp operates on five continents, but does not have a

presence in North America, a market Berson does not rule out,

though he said growth among its US-listed peers had been muted.

"Canada might be more attractive for us," Berson said.

And any acquisition would be closely related to Bidcorp's

current business.

"We have no appetite to move out of food services," Berson

said, adding that the firm could do more retail business, but

was not about to open supermarkets.

Bidcorp has pulled back from low-margin, high-volume

logistics businesses globally, and started a rebranding

exercise, trading as "Bidfood" to reinforce its image as a

value-added food service group, he said.

Only in Britain, its largest market, does the firm still

have a significant logistics business, which according to Berson

accounts for 40 percent of sales, but zero percent of profit.

REUTERS