August 2020 poultry, feed industry mergers and acquisitions

According to Tiger Brands, in an announcement to the stock exchange, Molare has agreed to buy its slaughterhouse in Olifantsfontein. Meanwhile, its processing facilities in Germiston, Polokwane, and Pretoria will be purchased by Silver Blade Abattoir.

In a transaction effective on September 28, Molare will acquire the abattoir for ZAR100 million. In monthly installments, the firm will also pay to Tiger Brands around a further ZAR17 million for inventories.

For ZAR153 million, Silver Blade will acquire Tiger Brand’s Meat Processing Businesses as going concerns on November 1. Over a period of up to 15 months, it will also pay an estimated additional ZAR15

8 million for all inventories.

These agreements are subject to approval by Tiger Brands’ shareholders as well as regulatory authorities. An extraordinary general meeting for the company’s shareholders is scheduled for September 15.

Overview of the entities involved

Wholly owned by Tiger Brands through Tiger Consumer Brands, VAMP is a South African value-added meat products business. As well as one slaughterhouse, it operates three meat processing plants producing and packing meat products.

Under l

eading brands, its products that include polony, viennas, bacon, and sausages are sold to top-end retailers in South Africa.

In its latest unaudited results for the half-year to March 31, Tiger Brands reported growth in revenue under what is describes as “difficult trading conditions” for its Grains, Groceries, VAMP, and Exports businesses. While revenue was up 2% year-on-year at ZAR15.7 billion, operating income was ZAR1.1 billion, which is a fall of 29% over the same period.

Molare owns 3.3% of the country’s sows and accounts for 3.4% of national pork production. This makes the firm among South Africa’s largest pig producers. Based in Mpumalanga, Molare is one of the largest suppliers of pigs to Tiger Brands’ slaughterhouse.

Silver Blade Abattoir’s parent company, Country Bird, is a South Africa-based agribusiness that includ

es a vertically integrated poultry operation. Its brands include Supreme Chicken frozen chickens, Nutri Feeds, and Opti Agri day-old chicks. It has businesses in eight other African countries.

Divestiture linked to listeriosis outbreak

During a strategic review by Tiger Brands’ board in 2017, its VAMP business was identified for further evaluation, according to the company. This review followed an outbreak of listeriosis in South Africa in 2017 and 2018.

According to the firm, the latest transactions do not impact on ongoing class action, which was first announced to shareholders in March of 2018. Tiger Brands has also re-stated its commitment to resolve the related and ongoing legal process.

First cases of listeriosis in what became a widespread outbreak in South Africa were reported in January of 2017. Over the following 15 months, the disease is known to have killed 180 people, and sickened a further 948.

Eventually, the infection was traced back to Listeria monocytogenes contamination of ready-to-eat meats. The outbreak strain was detected in environmental samples taken from the Tiger Brands’ plant at Polokwane. Investigations were also carried out at other meat processing facilities in South Africa.