By Nqobile Dludla
JOHANNESBURG (Reuters) -South African food producer Premier Group has agreed to acquire all the shares of RFG through a share swap deal valued at about 5.7 billion rand ($329 million), in which RFG shareholders will take a 22.5% stake in the combined group.
By 1137 GMT, shares of Premier – the owner of Blue Ribbon bread and Snowflake flour – were up 4.99% at 161 rand after earlier reaching an all time high of 169 rand. RFG surged 36.73% to 21.89 rand, its highest this year.
Premier said on Thursday that RFG, a producer of convenience meal solutions such as Rhodes canned food and Bull Brand corned meat, would complement its existing portfolio of bakery, maize, rice and sugar and broaden its reach into new areas of the market.
Premier will offer one Premier share for every seven RFG shares, based on reference prices of 154 rand per Premier share and 22 rand per RFG share. RFG shareholders will also receive a cash payment for any fractional entitlements, the companies said.
Based on a Reuters calculation, this values the deal at around 5.7 billion rand.
The deal, which is subject to regulatory and shareholder approvals, will result in the delisting of RFG from the Johannesburg Stock Exchange. RFG’s senior management is expected to remain in place.
Sean Culverwell, investment analyst at Anchor, said the deal made strategic sense.
“The offer price is fair and likely comes as a relief to RFG shareholders,” adding that the deal signals more consolidation in the industry.
“There have been rumours of industry consolidation circling for some time, so this doesn’t come as a surprise to us,” he said.
Peer Libstar has said it is in preliminary talks regarding a potential takeover.
($1 = 17.3259 rand)
(Reporting by Nqobile Dludla; editing by Barbara Lewis, Kirsten Donovan)
