The deal will create one of SA’s largest food producers.
The Competition Commission has recommended that the Competition Tribunal approve Premier’s proposed acquisition of RFG, subject to conditions aimed at protecting jobs and boosting supplier development.
The deal, announced in October, will see Premier acquire RFG through a share-swap transaction that will create one of South Africa’s largest food producers, with annual revenue of close to R30bn (approx. $1.86 bn).
Once completed, the merger will bring Premier within striking distance of long-time FMCG market leader Tiger Brands.
While the Commission found that the transaction is unlikely to substantially lessen or prevent competition in any market, it attaches public-interest conditions to address employment and transformation concerns.
In a statement on Thursday, the commission confirmed that both companies have undertaken not to retrench any employees as a result of the merger for a period of three years from the implementation date.
Premier has also committed to increasing the merged group’s combined annual spend on enterprise and supplier development initiatives over the same three-year period.
“The Commission is of the view that the proposed transaction is unlikely to substantially lessen or prevent competition in any market,”
said the commission.
✔️ Premier makes some of the country’s best‑known staples, from Blue Ribbon bread and Iwisa maize meal to Snowflake flour and Manhattan and Mister Sweet confectionery, supported by a network of bakeries, mills, plants and 28 depots across South Africa and neighbouring countries.
✔️ RFG, meanwhile, produces a wide range of convenience foods including Rhodes Quality juices, Bull Brand canned meats, Magpie desserts and Squish baby foods, operating facilities in South Africa and Eswatini and exporting to major markets such as the US, UK, Europe and the Middle East.
Under the transaction, Premier will issue 37.2-million shares at R154 each in a one-for-seven exchange, valuing RFG at nearly R5.8bn. RFG shareholders will receive a 22.5% stake in the enlarged Premier Group. The deal involves no cash outlay and will lead to RFG’s delisting from the JSE once finalised.
The offer represents a premium of about 35% to 37% and is expected to create a more formidable competitor in the FMCG sector, spanning staples, baked goods, ready meals, baby food and canned products.
The combined entity is forecast to generate between R28bn and R30bn in annual revenue, with profit after tax of about R1.7bn (approx. $105.4 mn).
The Competition Tribunal will make the final decision on whether to approve the merger with the recommended conditions.
Source: Business Day
