South African consumer goods group Tiger Brands has indicated that it is considering making a move to acquire local rival AVI.
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The company is considering making a cash and share offer for AVI of ZAR24 per share, implying a total equity value for AVI of ZAR8bn (US$793.6m), Tiger Brands said today (17 November).
The offer would consist of ZAR14.40 in cash for every AVI share and 6.989 Tiger Brands shares for every 100 AVI shares, representing a 62% premium on AVI’s share price on Friday – the last trading day before Tiger’s announcement.
Tiger described the rationale for combining the two companies as “compelling”.
“The combination will create a focused and balanced fast-moving consumer goods company and will result in a more efficient and effective platform from which to position the combined entity for accelerated growth,” the company said.
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By GlobalDataTiger added that the combined entity would benefit from increased global competitiveness and a stronger base to further expand in the rest of Africa.
However, Tiger emphasised that its statement to the Johannesburg Stock Exchange did not represent a firm intention to make an offer. The company said that the decision to make a firm offer was subject to a number of conditions, including finding funding and obtaining shareholder support.
When contacted by just-food, AVI, which produces snacks and beverages, including Bakers, Pyotts and Baumann’s, declined to comment on the news. The company will issue a formal statement in “due course,” a spokesperson for the group said.
Tiger, a branded food company that operates primarily in emerging markets, already holds a 4.6% stake in AVI.
