Tiger Brands, one of the largest food manufacturers in Africa, has entered into two separate agreements to sell its value-added meat product business units as going concerns.
Its value-added meat product brands include Enterprise, Mieliekip, Renown, Bokkie and Top One, according to its website.
In an update to shareholders on Monday, Tiger Brands said the first agreement is with Molare regarding its abattoir business at Olifantsfontein.
The second agreement is with Country Bird subsidiary Silver Blade Abattoir regarding its meat processing businesses at Germiston, Polokwane and Pretoria.
Molare and Country Bird are separate and unrelated purchasers, it said.
Tiger Brands said that Molare, one of South Africa’s major piggery businesses, will acquire the abattoir business as a going concern for R100 million. The transaction is expected to be finalised on 28 September. Molare will also purchase the consumable stores inventory for approximately R4 million.
Silver Blade, meanwhile, will acquire the meat processing businesses at Germiston, Polokwane and Pretoria as going concerns for R153 million. Of this, R40 million will be payable on November 1, and the balance on April 1, 2021.
The two agreements are subject to Tiger Brands shareholder approval, all regulatory approvals and the conclusion of transitional services agreements.
According to Tiger Brands, the agreements form part of a strategic review conducted by the board of directors in 2017.
The food group said on Monday that the role of its value-added meat products business units within the company’s portfolio had been earmarked for evaluation “given this business’s unique value chain and the perishable nature of its underlying products”. The nationwide listeriosis outbreak – which took place during 2017 and 2018, and which is now the subject of a class action lawsuit – led to the temporary closure of these manufacturing facilities and this delayed the evaluation.
According to Tiger Brands, the transactions do not affect the class action.
Selling the businesses
Tiger Brands said that following the receipt of several “indicative offers”, the board approved the commencement of a formal due diligence process in November 2019. This process has now culminated in the two agreements announced on Monday.
In June this year the Johannesburg Division of the Gauteng High Court ruled in favour of Tiger Brands to compel the National Institute for Communicable Diseases, two accredited national laboratories and a number of meat producers to provide critical epidemiological information required for the listeriosis class action lawsuit.
Tiger Brands believes the effect of the ruling will help provide access to information relevant to the proceedings, and enable parties on both sides of the class action “to move matters forward”.
“Tiger Brands remains committed to abiding by the legal process to ensure that a resolution of the matter is reached in the shortest possible time in the interest of all parties, particularly the victims of listeriosis,” it said.
For the six months ended March 2020, it reported profits of R359.6 million compared to R1.4 billion for the corresponding period in 2019. In May this year Tiger Brands reported that its profits had fallen about 75% because of the impact of the Covid-19 pandemic on its food business.