JSE firm buys 49% stake in Senn Foods
Brian Benza | Wednesday May 14, 2014 14:27
RCL has agreed to spend 79.9 million rand (P66.5 million) for the 49 percent stake as part of its plans to scale up in sub-Saharan Africa and diversifying from its chicken business.
The acquisition will be done through RCL operating subsidiary, Vector Logistics.
Senn distributes dry, frozen and chilled foodstuffs in Botswana. RCL already has a similar business in its Vector Logistics, which distributes to chains such as Chicken Licken, Nandos and Wimpy.
A struggling South African economy and the availability of cheap chicken imports have hurt RCL’s profitability, compelling it to diversify into other segments such as sugar.
“The acquisition is in line with RCL’s growth aspirations into Africa and Vector’s long term strategy to extend its reach into other African countries and offer world class logistics and sales solutions to existing and future partners in these countries,” said RCL in a statement.
In accepting the buy-in, the Competition Authority (CA) said that they determined to unconditionally authorise the proposed transaction on the grounds that the analysis of the facts of the case have shown that there were no substantive competition concerns that will arise in the distribution of chilled, frozen and ambient products service market, on account of the proposed transaction in Botswana.
“The proposed transaction is not likely to result in the prevention or substantial lessening of competition, nor endanger the continuity of the service, due to the absence of a geographical overlap between the activities of the merging parties.
“Even though the merged entity is regarded as a dominant enterprise in the distribution of chilled, frozen and ambient products service market in Botswana, this position was not attained as a result of the implementation of the merger,” read a statement from CA director of mergers and monopolies, Magdeline Gabaraane.
In January, RCL purchased two subsidiaries of TSB Sugar Holdings for P4 billion through a share issue.