South African consumer goods group Tiger Brands has indicated that it is considering making a move to acquire local rival AVI.

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.

Tiger 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.