South African packaged goods company Tiger Brands has agreed to sell its processed meats business through two separate deals, for a combined price of approximately $24.7 million as stated by Reuters.
The deal comes after the company announced its intentions to dispose of its Value-Added Meat Products (VAMP) business in November last year, and as it faces an ongoing class action lawsuit over its part in the listeriosis outbreak.
Tiger Brands has entered into an agreement with pork producer Molare to divest its abattoir business at Olifantsfontein. Meanwhile, the company’s meat processing factories at Germiston, Polokwane and Pretoria will be acquired by Silver Blade Abbatoir, a wholly-owned subsidiary of Country Bird Holdings.
Molare is one of South Africa’s largest piggery business and one of the current main suppliers to the abattoir business. According to Reuters it will pay 117 million rand ($6.73 million) for the business.
Country Bird is an agricultural business in Southern Africa which supplies the market with processed chicken product and Reuters states that it will pay 311 million rand ($17.89 million) for Tiger Brands’ facilities.
“One of the major outcomes we would have achieved by selling the businesses as going concerns, is that the jobs of almost 1000 employees will be safeguarded,” said Tiger Brands CEO Noel Doyle.
The VAMP business was initially embarked for strategic review in 2017, however due to a listeriosis outbreak in 2017/2018 the manufacturing facilities were closed, causing a delay in the evaluation process.
“We were confident that our operations would add tremendous value to a company for which meat processing is a better strategic fit,” added Doyle.
The listeriosis outbreak which killed more than 200 people in South Africa was traced back to a ready-to-eat processed meat plant run by Enterprise Foods, which is owned by Tiger Brands. However, the company confirms that the sale and disposal process will not affect its commitment to the class action legal process.
According to Tiger Brands, any potential liability under the class action will not transfer to the new owners. As part of the agreement, Tiger Brands indemnifies the purchasers against any exposure that may arise as a consequence of the conclusion of the legal process.
Both deals are subject to regulatory approval including the approval of the Competition Commission.
© FoodBev Media Ltd 2020