SOUTH AFRICA – South African food manufacturing giant, Tiger Brands has entered into two separate agreements to sell its value-added meat product (VAMP) business units as going concerns for a combined R428 million (US$24.7 million).
The agreements are with two separate and unrelated purchasers i.e. Molare Proprietary Limited, one of South Africa’s largest pork processors and Silver Blade, a subsidiary of Country Bird Holdings.
The first agreement with Molare regards its abattoir business at Olifantsfontein, which Molare will acquire for R100 million (US$5.7m) and a further R17m (US$0.97m) for inventories at the business.
The transaction is expected to be finalised on 28 September, reports Fin24.
Silver Blade, on the other hand will acquire the meat processing businesses at Germiston, Polokwane and Pretoria for R153 million (US$8.7m), together with all the inventories located at the units for R158 million (US$9m).
Of this, R40 million (US$2.3m) will be payable on November 1, and the balance on April 1, 2021.
The two agreements are subject to Tiger Brands shareholder approval, all regulatory approvals and the conclusion of transitional services agreements.
“One of the major outcomes we would have achieved by selling the businesses as going concerns is that the jobs of almost 1,000 employees will be safeguarded,” said Tiger Brands Chief Executive Noel Doyle.
According to Tiger Brands, the disposal of the Vamp business portfolio, which was closed temporarily in 2018 after the world’s biggest listeriosis outbreak, is part of a strategic review initiated in 2017 before that outbreak after it concluded that the business was “not an ideal fit” within the group’s portfolio.
The company is facing a class action lawsuit over its role in the listeriosis outbreak, which killed more than 200 people in South Africa and was traced back to a factory run by Tiger Brands-owned Enterprise Foods.
Tiger Brands said that any potential liability under the class action will not transfer to the new owners.
As part of the agreements, the company indemnifies the purchasers against any potential liability that may arise on conclusion of the legal process, Tiger Brands said.
In June this year the Johannesburg Division of the Gauteng High Court ruled in favour of Tiger Brands to compel the National Institute for Communicable Diseases, two accredited national laboratories and a number of meat producers to provide critical epidemiological information required for the listeriosis class action lawsuit.
Tiger Brands believes the effect of the ruling will help provide access to information relevant to the proceedings, and enable parties on both sides of the class action “to move matters forward”.
“Tiger Brands remains committed to abiding by the legal process to ensure that a resolution of the matter is reached in the shortest possible time in the interest of all parties, particularly the victims of listeriosis,” it said.