South African consumer goods producer Libstar is currently attracting attention from potential acquirers amid an internal business review.
In a statement issued today (16 September), the owner of the Lancewood dairy brand disclosed that it had “received non-binding, indicative expressions of interest” from unnamed parties.
Back in March, Libstar revealed that it was exploring “potential strategies through which to deliver meaningful value unlock for stakeholders”.
The company confirmed that the submissions included the “potential acquisition of all Libstar securities currently in issue.”
Libstar’s board has thus “resolved to further evaluate” the expressions of interest, but it cautioned that discussions with the “potential investors” remain at an “early stage”.
The company added: “There can be no certainty that these engagements will ultimately result in a binding offer.”
This disclosure coincided with the release of its financial results for the first half of the year.
During this time, the Denny Mushrooms owner recorded revenue of R5.95bn ($343.2m), reflecting a 6.6% increase from the same period last year.
Operating profit also rose by 14.6%, reaching R230.8m, while total profit surged by 8.7% to R90.7m.
Despite these gains, Libstar noted that the “total defined market” for its products declined during the first half of the year. The company attributed this to “relentless pressure on consumers, driven by ongoing food inflationary headwinds and constrained disposable income.”
Looking ahead, the group expressed optimism about the “strength of its brands, customer partnerships, and operational fundamentals,” despite the prevailing macroeconomic challenges.
As part of its earlier review, Libstar announced plans to implement a shared-services framework specifically for its ambient products business, emphasizing wet condiments.
Additionally, Libstar indicated it would also make adjustments to its retail, snacks, and spreads divisions, combining the retail division, Rialto, with Ambassador Foods (snacks) and Cape Coastal Honey (spreads).
For 2024, Libstar reported over R500m in impairment charges, resulting in an EPS loss for the year. Nevertheless, the company achieved revenue growth of 3.1%, totaling R11.7bn, although it faced a 3.2% decline in sales volumes.
