Premier Group has announced plans to acquire fellow South African food producer RFG Holdings in a share-swap deal.
Owners of RFG stock will get one Premier share for every seven they hold.
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This offer equates to a 35.6% premium over the closing prices and a 37.5% premium above the 30-day volume-weighted average prices for Premier and RFG shares as of 14 October.
The swap ratio draws from a reference price of R22 per RFG share and R154 per Premier share.
Upon deal completion, RFG will delist from the Johannesburg Stock Exchange (JSE).
RFG shareholders will collectively hold about 22.5% of the expanded Premier Group.
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By GlobalDataRFG’s senior management will retain their positions, overseeing RFG activities under Premier to maintain manufacturing and client service.
Established in 1824 and with its base in Midrand, Premier operates two units.
These units are Millbake, handling bread, maize, and wheat items; and Groceries and International, covering sugar sweets, household and personal care goods, plus facilities in Mozambique.
The company offers 38 consumer brands and private labels. Key brands include Blue Ribbon, BB Bread, Snowflake, Iwisa, Super Sun, Nyala, Manhattan’s, Lil-Lets, and Dove.
The operation includes 30 mills, bakeries, and factories, backed by 28 depots in South Africa, Mozambique, Eswatini, and Lesotho, with exports reaching 41 nations.
Set up in 1896 in Groot Drakenstein, Western Cape, RFG runs 14 plants in South Africa and Eswatini.
The company specialises in ready-to-eat meal options for buyers in South Africa, sub-Saharan Africa, and other global markets.
Its brands – Rhodes, Bull Brand, Magpie, Today, Mama’s Pies, Squish, and Hinds –alongside private labels are supplied to all “major” South African and overseas clients.
Primary export destinations cover the UK, Europe, the US, and the Far East, alongside 13 other sub-Saharan African markets.
Kobus Gertenbach, Premier’s chief executive, stated the deal allows shareholders from both firms to join the growth of the combined entity, which will produce yearly revenue nearing R28bn ($1.6bn) and after-tax profit of R1.7bn.
The move will also lift Premier’s free float on the JSE, improving share liquidity, according to a joint statement by the firms today (16 October).
Gertenbach noted: “RFG is a highly attractive acquisition opportunity for Premier, with its market-leading position in convenience meal solutions, strong market share positions across key product categories and its portfolio of well-established brands.”
He called RFG a “complementary” addition to Premier, with “limited integration risk”.
The businesses have common customers but no “overlap” in products and categories, he said.
He further noted that the deal will “unlock value and deliver significant synergies while increasing the scale of the operations”.
Since its JSE debut in March 2023, Premier’s market value has risen by R13.1bn to R19.8bn, as per the statement.
RFG joined the JSE in October 2014 with a market value of R4.3bn. Over that time, it has carried out ten buyouts to broaden its products, clients, and brand reach into fresh areas.
Pieter Hanekom, RFG’s chief executive, believes that the deal offers “compelling strategic rationale for creating a stronger player in the food producer sector”.
The deal is contingent on RFG shareholder votes and clearance from competition and regulatory bodies. Holders of 77.7% of RFG shares have pledged to back the deal.
As a Category 2 transaction under JSE rules for Premier, it needs no Premier shareholder consent. Premier’s largest investors – Brait and Titan – as well as major institutional shareholders, support the arrangement.
