JSE-listed Tiger Brands, through its wholly-owned subsidiary, Tiger Consumer Brands, has entered into two separate sale of business agreements (SBAs) for the disposal of its value-added meat products (VAMP) business units as going concerns.
The two SBAs comprise an agreement with Molare, in respect of the abattoir business at Olifantsfontein; and an agreement with Silver Blade Abattoir, the sole shareholder of which is Country Bird Holdings, in respect of the meat processing businesses in Germiston, Polokwane and Pretoria.
As part of the strategic review conducted by Tiger's board of directors in 2017, the role of VAMP within the company’s portfolio had been earmarked for further evaluation, given this business’s unique value chain and the perishable nature of its underlying products.
The company noted that the events of the nationwide listeriosis outbreak, which took place during the course of 2017 and 2018 and which resulted in the temporary closure of the facilities, had delayed the evaluation.
With the VAMP business having reopened at the beginning of the 2019 financial year, the board considered it appropriate to initiate the further evaluation of VAMP, which confirmed that the business was not an ideal fit within the Tiger Brands portfolio.
Following the receipt of several indicative offers, the board approved the start of a formal due diligence process in November 2019.
Molare will acquire the abattoir business, as a going concern for R100-million.
Further, Molare will acquire all inventories (including consumable stores) located at the abattoir business.
The aggregate consideration for the inventories (excluding consumable stores) is expected to be about R13-million, which will be paid in six monthly instalments.
Molare will also buy the consumable stores inventory for about R4-million.
Silver Blade will acquire the meat processing businesses as going concerns, for R153-million.
Further, Silver Blade will acquire all the inventories located at the meat processing businesses. The aggregate consideration for the inventories is expected to be about R158-million.