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Juicy R165m deal for Rhodes

ONLY months after listing on the JSE, Cape Town-based food conglomerate Rhodes has forked out R165m to acquire Pacmar Proprietary.

Wellington based Pacmar started up in 1997, specialising in the manufacture and distribution of fruit juice products in the local, regional and international markets. The fruit juices are marketed under various, well-known, third party brands, private label programmes and its own brands. It’s most popular brands include Wilde, Amazing, Zing and Crystal Falls.

Rhodes directors reckon Pacmar represents an attractive investment opportunity that is aligned with the company’s current strategy of expanding its business through lateral extensions into product categories adjacent to its current ranges. Rhodes eponymous brand covers canned fruit and vegetables and jams, while the company also owns Portabello (cheese,) Trout Hall (fruit,) Speckeham (viennas,) Bull Brand (canned meat,) Magpie (pies,) Apex (meat) and Hazeldene (jams.)

Importantly Rhodes already has two fruit plants situated in the Western Cape and Swaziland, which produce an extensive range of fruit purees and juice concentrates which is peddled to the international beverage industry. Rhodes directors pointed out the acquisition offered a significant opportunity to add further value to these products – adding that the company was well placed to add value to the Pacmar business.

Rhodes appears to have paid a premium price for Pacmar, at least judging by the most recent value and profits attributed to the business. The statement outlining the terms of the acquisition reflects Pacmar’s total net asset value at the end of its last financial year (31 July 2014) at just R38,6m with total operating profits of R22m garnered from revenue flows of R369m.

Interestingly Pieter Hanekom, the executive who previously headed up Pioneer Foods’ Ceres Beverage Company, recently joined the Rhodes Food executive team. Hanekom – with 13 years’ experience at Ceres Beverage Company – will head-up the Rhodes’ new look juice operation.

Speaking of Ceres Beverage Company, there is still no further news of Pioneer’s recent decision not to renew the license agreement to bottle Pepsi soft-drink products. The non-renewal was apparently by mutual agreement, but leaves the question of who would take up the bottling services now that it has been confirmed that the Pepsi brand will remain in South Africa.

Pioneer recognised a fairly large impairment on the Pepsi assets suggesting Ceres Beverage Company was incurring a substantial loss on these bottling operations. It seems highly unlikely that acquisitive Rhodes will be at all interested in the Pepsi bottling operations. There has been some talk that SoftBev – the recent amalgamation of Epping-based Bowler Metcalf’s Quality Beverages with a Durban-based soft-drink bottling specialist – might be a candidate to take on the Pepsi bottling function.

But SoftBev might not want to push into the tough cola market, dominated by the imposing Coca-Cola. Pioneer has already indicated that Ceres Beverage Company’s controlled exit from Pepsi should be completed by mid-year.

By Jenni McCann


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