The Rhodes Food Group (RFG), which owns a diversified portfolio of brands that are sold in supermarkets, has acquired a frozen foods business from Pioneer Foods in a deal that will bolster its growing frozen pies and pastry business.
The value of the transaction was not disclosed.
Other product ranges of the acquired business include sausage rolls, pizza and party packs catering to the top end of the retail market in SA. RFG’s manufacturing is done in a facility in Atlantis, Western Cape, and the products are distributed nationally.
The frozen pies and pastry business falls under the fresh food division, and makes up about 29% of RFG’s group revenue.
“The acquisition has the potential to generate good synergies for the company while also diversifying our offering into the retail channel,” outgoing CEO Bruce Henderson said in a voluntary statement on Tuesday.
The deal, which still awaits the approval of the Competition Commission, will exclude operations in neighbouring Botswana and eSwatini.
RFG competes with a number of other JSE-listed food producers including Tiger Brands and AVI, as well as privately owned food product labels, for a share of supermarket shelves.
Henderson, who is due to leave the company in September, is credited for expanding the company from a single-brand fruit business into a diversified food producer during his 22-year career.
RFG also sells brands such as Bull Brand, Magpie, Squish, Bisto, Hinds and Pakco to Sub-Saharan Africa and as far afield as China, which gives it a shield against the potential risk of a single market.
However, the company has yet to fully endear itself to investors since coming to the market in 2014. RFG shares were relatively steady on Tuesday at R12.50. After debuting at about R12, the share price shot up to R29 before falling to the current level, which gives it a market valuation of R3.2bn.
Other food produces have not done as well on the market over the past five years, after higher input costs ate into their profit margins while consumer spending remained weak, aggravated by the fallout of Covid-19.
Tiger Brands was down 42% to R205.77 over a five-year period, and AVI lost 14% to R71.28. Libstar was off 44% to R6.10 since coming to the market three years ago.
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