Rhodes Food has entered into an agreement to acquire 100% of the issued share capital of fruit juice product manufacturer and distributor Pacmar for R165-million. The deal is expected to complement its parent company’s, Rhodes Food Group’s (RFG’s), strategy of expanding its business through lateral extensions into product categories adjacent to its current product ranges.

Rhodes Food, with its two fruit plants in the Western Cape and Swaziland, respectively, produces an extensive range of fruit purees and juice concentrates which are sold to the international beverage industry.

“The acquisition offers a significant opportunity to add further value to these products. The board of RFG is of the view that good synergies will arise from the acquisition and that Rhodes Food is well placed to add value to the Pacmar business,” RFG said in a statement to shareholders on Wednesday.

Pacmar’s total net asset value at the end of its last financial year (July 31, 2014) was R38.6-million, while earnings before interest, taxes, depreciation and amortisation for the financial year were R22.2-million, on revenue of R368.8-million.

Rhodes Food would pay R165-million to Pacmar’s shareholders after April 1 or on the first business day after the last day of the month in which the last of the conditions precedent were fulfilled or waived.

The acquisition was subject to the Financial Surveillance Department of the South African Reserve Bank’s approval before April 30, if required, the competition authorities' approval before June 30, Rhodes Food completing a comprehensive due diligence investigation to its satisfaction on or before February 28, RFG’s board of directors formally approving the acquisition within three business days after the completion of the due diligence, the delivery of a disclosure schedule that detailed the matters limiting the warranties provided by Pacmar and its shareholders to Rhodes Food on or before January 31 and the conclusion of a short-term consultancy agreement with Pacmar CEO Carlo Marra on or before January 31.

Pacmar, based in Wellington, in the Western Cape, started operating in 1997 and manufactures and distributes fruit juice products in the local, regional and international markets under various well-known third-party brands, private label programmes and its own brands. The products include fruit juices and other beverages, which are packed in both aseptic and preserved formats. Pacmar’s brands include Wilde, Amazing, Zing and Crystal Falls. 

“Pacmar enjoys the benefit of a combination of extensive experience and technical expertise in both the fruit juice and flavour industries, enabling it to offer a specialised service to the industry and to continuously develop new products,” noted RFG.

The Rhodes Food juice operation will be headed up by Pieter Hanekom, who was the executive responsible for the Ceres Beverage Company for 13 years and who recently joined the Rhodes Food executive team. Marra is expected to stay on for a three-month handover after the effective date.