South Africa’s Libstar, which drew takeover interest this year amid a strategic review, has sold its fresh mushrooms business to an undisclosed party.
The disposal does not cover the Denny mushroom brand, which Libstar will exclusively license to the new owner. The South African company is undergoing a transformation to focus solely on foods and will now take the brand into other product areas such as condiments.
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In a stock exchange filing yesterday (10 December), Libstar said the fresh mushroom operations include the disposal of facilities in Gauteng and KwaZulu-Natal, effective from 1 December.
The Lancewood dairy brand owner did not reveal the value of the transaction.
Libstar received takeover interest from unnamed parties in September after revealing in March that it was evaluating “potential strategies through which to deliver meaningful value unlock for stakeholders”.
Disposing of the mushroom operations is a “further decisive step in simplifying the group’s portfolio by sharpening its focus on priority categories with sustainable growth potential”, the company said.
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By GlobalDataLibstar said it expects to record a pre-tax loss of between R45m ($2.65m) and R55m on the mushroom sale for the financial year ending 31 December.
The loss will be included in reported earnings per share, but excluded from headline earnings per share.
Alongside the mushroom exit, Libstar confirmed it is “evaluating” non-binding expressions of interest for the possible sale of its remaining household and personal care business Contactim as it seeks to focus on food.
A trading update was also provided for the 47 weeks to 21 November.
Libstar reported year-to-date revenue growth of 6.7% on a like-for-like basis, excluding the mushroom business.
Group volumes rose 3.1%, with price and mix contributing a further 3.6%.
In the ambient products category, revenue increased by 5.6%. Price and mix changes contributed 5.9%, while volumes decreased by 0.4%.
Export volumes of dry condiments were below the prior year. Libstar said the performance was characterised by a “positive mix change” towards Libstar-branded products and lower private-label sales to discount retailers in Australia, the UK and Japan.
It added that the Cape Herb and Spice brand continued its “double-digit growth” in domestic and international markets.
Revenue in the perishable products category rose by 8.1%. Volumes increased by 23.2%, while price and mix fell 15%. Excluding the impact of raw milk sales, volumes increased by 1.4%.
The company said volume growth was driven by value-added chicken products in both the retail and foodservice channels.
Sales volumes of core dairy sub-category products, including cheese, butter and yoghurt, grew by 4.7%.
