Introduction and overview
Shareholders are advised that the Company’s wholly owned subsidiary Rhodes Food Group Proprietary Limited (“Rhodes Food” or “the Purchaser”) and General Mills have entered into an agreement (“Agreement”) dated 30 September 2015 in terms of which Rhodes Food will acquire the Foodservice business of General Mills from General Mills (“the Acquisition”).
Description of the business carried on by General Mills
General Mills launched its Foodservice business in 1995 and conducts its manufacturing business from a highly automated facility in Johannesburg. Its products are distributed nationally, primarily to the convenience channel. The product range includes dry and frozen baked goods that are quick and easy to use. This includes Tubeset muffin batters, croissants, cinnamon scrolls, place and bake frozen preformed cookies, frozen pizzas, dry bakery mixes and ready-to-eat muffins, the muffin batters and muffins being by far the most significant sales item. Through the offering of innovative products, combined with convenience and ease of preparation, this business has become the preferred supplier and leader in muffins to the South African food service market.
Expanding into the baked goods market
The board of RFG is of the opinion that the Acquisition presents an attractive investment opportunity which is aligned with RFG’s strategy of expanding its business operations through value accretive acquisitions. The board believes that the frozen bakery category complements RFG’s growing pie and pastries business, particularly with its focus on the distribution of these products to the convenience channel, and that good synergies will arise from the Acquisition.
Due to confidentiality clauses within the Sale and Purchase agreement, the Purchaser is unable to disclose the purchase consideration. The effective date of the Acquisition will be 30 November 2015.
The implementation of the Acquisition is not subject to any conditions precedent.
Revenue attributable to the Foodservice business of General Mills
The Foodservice business of General Mills generated revenue of R65 525 000 (sixty five million and five hundred and twenty five thousand Rand) in its financial year to 31 May 2015.
Classification of the Acquisition
The Acquisition does not constitute a categorised transaction in terms of the JSE Limited Listings Requirements and this announcement is therefore made on a voluntary basis.