Johannesburg - JSE-listed Famous Brands yesterday announced that it had acquired 100 percent of the business of Lamberts Bay Foods (LBF), a wholly-owned subsidiary of Oceana Group.
The group said the purchase fell below the threshold of a categorised transaction of the JSE listings requirements and would be settled from cash reserves. The latest acquisition comes a month after the group snatched a 51 percent stake in Lupi Osteria, an authentic Italian restaurant business that operates in KwaZulu-Natal.
Value
This month Famous Brands also acquired a 51 percent stake in Salsa Mexican Grill, a fast casual dining concept centred on Mexican food and drinks.
Famous Brands strategic advisor Kevin Hedderwick said the company would only disclose the value of the LBF acquisition to the shareholders during the group’s annual general meeting later this year.
Hedderwick said that the acquisition did not come as a surprise as LBF had been supplying products to Famous Brands for the past 20 years.
“We have been in talks with the chief executive of Oceana group Francois Kuttel since 2015 about us buying Lamberts and we are happy that both parties have reached an agreement,” he said. Hedderwick led Famous Brands as chief executive for 16 years before stepping down in February.
“This acquisition not only affords us security of supply of a key strategic menu item for our franchised network, it also provides us with an existing food services and retail customer base, which has significant expansion potential over time,” he added.
The deal is subject to Competition Commission approval.
LBF processes French fries and other value-added potato products for sale to wholesalers, retailers and restaurant chains. The company was was established in 1995 by Oceana.
It processes 24 000 tons of potatoes a year, sourced mainly from Mpumalanga, Limpopo, Free State and the Sandveld region of the Western Cape.
Hedderwick said the group did consider the drought but felt that acquiring LBF was important and based on the long-term consideration.
Drought
“The drought won’t stay with us for long and it will eventually be (a) thing of the past. Lamberts will continue to grow because the company is already playing a significant role in providing employment in that area,” said Hedderwick.
“Famous Brands’ management has set an audacious operating profit target of R1 billion by February 2018. This acquisition will make an important contribution to achieving that goal.”
LBF has 305 employees and is the single-largest employer on the West Coast north of St Helena Bay. The company also employs 2 250 people through its operation.
It said staff that were beneficiaries of the Oceana Empowerment Trust would not be affected by this transaction and they would continue to receive their benefits.
Kuttel described the transaction as beneficial to all parties. He said: “Given Famous Brands’ extensive experience in managing supply-chain businesses, we are confident that they will unlock further value for all stakeholders.”
Famous Brands’ share price opened higher on the JSE yesterday morning, gaining 3.4 percent in early trade before settling 1.39 percent higher for the day to close at R115.59.
BUSINESS REPORT