JSE-listed Long4Life has acquired beverage producer, packer and distributor Chill Holdings from Chill’s management, Africa Beverage Ventures and Raubenbe, for at least R452-million, after deducting net debt of R182-million.
The transaction, effective from the locked-box date of July 1, 2017, provides Long4Life with an opportunity to bolster its presence in the growing beverage sector.
“This acquisition is an exciting opportunity for us to enhance our presence in the growing South African beverage space, which we see as an important component of the lifestyle, wellness and leisure sector, servicing a large part of the South African and African population,” said Long4Life CEO Brian Joffe.
Long4Life described Chill as a Western Cape-based producer, packer and distributor of a range of beverages, with storage and distribution facilities located in major cities across South Africa.
The new acquisition also boasted a fully integrated in-house business platform from product conception and development, through production to sales and marketing.
Chill’s management team will remain with the company after the acquisition.
“Over the last year, we invested some R100-million of capital expenditure to expand production facilities and improve efficiencies, which has boosted our class leading capability,” said Chill founding investor and MD Grant Hobbs.
“With the strategic and balance sheet strength that Long4Life provides, we can further enhance our integrated business model and take advantage of the tremendous growth prospects in the industry. We will also be in a better position to leverage our growing export activities.”
The purchase consideration will be adjusted upwards by 7.05x for each rand of earnings before interest, taxes, depreciation and amortisation (Ebitda) achieved during the financial year ended June 2018.
Chill recorded an Ebitda of R86-million, equating to a net profit after tax of R46-million, for the financial year ended June 30, 2017.
The purchase consideration will be settled through 75% in cash and 25% through the issue of Long4Life shares at a price of R5.21 a share.
The deal remained subject to conditions precedent, including competition authorities’ approval; amendments to certain operational agreements; and employment and restraint agreements being entered into between Long4Life and certain members of the Chill management team.