Premier Group has announced plans to acquire fellow South African food producer RFG Holdings in an advantageous share-swap deal.
Under this agreement, RFG shareholders will receive one Premier share for every seven shares they currently hold.
This offer represents a 35.6% premium over the closing prices and a 37.5% premium above the 30-day volume-weighted average prices for both Premier and RFG shares as of 14 October.
The swap ratio is based on a reference price of R22 per RFG share and R154 per Premier share.
Once finalized, RFG will be delisted from the Johannesburg Stock Exchange (JSE).
Following the acquisition, RFG shareholders will collectively hold approximately 22.5% of the enlarged Premier Group.
Notably, RFG’s senior management will retain their current roles, ensuring continuity in overseeing manufacturing and client services.
Founded in 1824 and based in Midrand, Premier operates in two main units.
These include Millbake, which handles various bread, maize, and wheat products, and Groceries and International, encompassing sugar, sweets, and household goods, along with operations in Mozambique.
Premier boasts 38 consumer brands and private labels. Key offerings include Blue Ribbon, BB Bread, Snowflake, Iwisa, Super Sun, Nyala, Manhattan’s, Lil-Lets, and Dove.
Its extensive operation consists of 30 mills, bakeries, and factories, supported by 28 depots located in South Africa, Mozambique, Eswatini, and Lesotho, with exports reaching 41 countries.
Established in 1896 in Groot Drakenstein, Western Cape, RFG operates 14 plants across South Africa and Eswatini.
This company specializes in ready-to-eat meals for consumers in South Africa, sub-Saharan Africa, and additional global markets.
Brands such as Rhodes, Bull Brand, Magpie, Today, Mama’s Pies, Squish, and Hinds, alongside private labels, serve major South African and international clients.
Primary export destinations include the UK, Europe, the US, and the Far East, as well as 13 other sub-Saharan African countries.
Kobus Gertenbach, Premier’s CEO, noted that this deal creates an opportunity for shareholders from both companies to participate in the growth of the combined entity, which is projected to generate annual revenues close to R28 billion ($1.6 billion) with an after-tax profit of R1.7 billion.
Additionally, this move will enhance Premier’s free float on the JSE, consequently improving share liquidity, as highlighted in a joint statement by both firms on 16 October.
Gertenbach emphasized: “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 described RFG as a “complementary” addition to Premier, indicating “limited integration risk.”
While the businesses share common customers, there is no “overlap” in products and categories, he added.
Furthermore, this deal is expected to “unlock value and deliver significant synergies, while increasing operational scale.”
Since its debut on the JSE in March 2023, Premier’s market value has increased by R13.1 billion to R19.8 billion, according to the statement.
Notably, RFG, which joined the JSE in October 2014 with a market value of R4.3 billion, has executed ten acquisitions over the years to expand its product lines, clientele, and brand presence into new sectors.
Pieter Hanekom, RFG’s CEO, believes that this merger offers a “compelling strategic rationale for creating an even stronger player in the food production sector.”
This acquisition is contingent upon RFG shareholder approval and clearance from regulators. Importantly, 77.7% of RFG shareholders have pledged support for the deal.
As a Category 2 transaction under JSE regulations, Premier does not require shareholder consent for this move. Premier’s major investors, including Brait and Titan, as well as significant institutional shareholders, have expressed support for the arrangement.
