Foodcorp Wins Tribunal Nod For First Lifestyle Buyout
Unlisted food manufacturer Foodcorp said it aimed to dominate the ready-to-eat segment of the market after the Competition Tribunal yesterday gave it the go-ahead to buy out First Lifestyle for R1,2bn.
CEO Justin Williamson said that the ready-to-eat market offered good growth potential and was buoyed by societal needs, such as increasing traffic and dual-income households.
Roy Chapman, Sanlam Investment Management head of financials and industrials, said convenience food was a growth sector. He pointed to a push by retailers, such as Woolworths and Pick ’n Pay, to roll out more convenience stores as indicators of the growth potential.
While SA is not near the US average expenditure on convenience food of about 50 US cents, Chapman said the sector was growing and being pursued by several companies in the sector.
Foodcorp, which houses brands such as Glenryck, Nola, Ouma, Yum Yum, Dogmor and Bobtail, bid against 14 other companies to acquire First Lifestyle in a six-month long process.
First Lifestyle’s primary business is Pieman’s Pantry and it also owns Fifers Bakery and Seemann’s Meat products. Williamson said, despite impending rate hikes, growth in the sector was sustainable as the market was not fully serviced.
The sector offered growth opportunities and companies within the First Lifestyle stable would be expanding their portfolio mix to fill growing customer demand, he said. The combined company will have a turnover of about R4,5bn, as First Lifestyle would contribute about R1,4bn to Foodcorp’s annual income.