Rhodes Food Group today announced plans to acquire Durban-based food producer Pakco for R200 million.
Pakco owns a portfolio of strong and well-known brands, including the iconic Bisto brand, Hinds, Buffalo, Southern Coating, Trotters, Gold Dish and Pakco.
Products are sold by all major retailers and wholesalers in the domestic market and exported to eight neighbouring African countries.
Rhodes Food Group chief executive officer Bruce Henderson said the group’s strategy is to complement organic growth by acquiring food producers which will enable the business to expand into new and complementary product categories.
Pakco Joins the Rhodes Family
Pakco is the seventh food producer acquired by Rhodes Food Group since listing on the JSE in October 2014, with the acquisitions totalling R690 million.
“Pakco produces branded and private label ranges of spices, condiments, instant meals and desserts in dry packed, bottled and canned formats in its facility outside Durban. The acquisition is aligned with our strategy of expanding into adjacent product categories and will allow us to gain entry into the dry packed foods market.”
Henderson said the six acquisitions prior to Pakco have all been successfully integrated into the group’s operations and had accelerated entry into new product categories.
“Our strategy is evident in the acquisition of Pacmar which was the catalyst for our entry into the fruit juice market while Boland Pulp facilitated our entry into the baby food market through the Squish brand.”
“Similarly, the acquisitions of General Mills South Africa, which produces dry and frozen bakery products, and Alibaba Foods, which manufactures halaal Eastern foods, have strengthened our position in the bakery and snacking categories. Deemster has enabled Rhodes to enter the bottled salads and pickles market,” he said.
Pakco generated revenue of R221.5 million and EBITDA of R9.5 million in its 2015 financial year. The acquisition is subject to a due diligence process and competition approval, and is expected to be effective from 1 January 2017.
Henderson said Rhodes Food Group is well positioned to improve the profitability of Pakco and increase sales volumes in the short term.