Tiger Brands is to sell its deciduous fruit business Langeberg & Ashton Foods (LAF) to a consortium of parties and a local co-operative of fruit growers in the Ashton region in the Western Cape.
The transaction, through its unit Tiger Consumer Brands, is part of group’s portfolio optimisation strategy.
The consortium consists of the Ashton Fruit Producers Co-operative and a development finance institution with a mandate for job creation, improving livelihoods and supporting the transition to net zero, Tiger Brands said. The Ashton Fruit Producers Co-operative is made up of member producers from the Robertson, Ceres, Breede River and Klein Karoo areas.
In terms of the transaction, Tiger Consumer Brands will sell LAF as a going concern for a total cash consideration of R1 to a newly formed company established by the consortium.
Tiger Consumer Brands will commit R150m towards the establishment of a community trust aimed at socioeconomic development initiatives benefiting the broader Langeberg community, it said on Friday. In terms of the sale agreement, the R150m commitment will enable the community trust to subscribe for and beneficially hold a 10% shareholding in LAF through the new company, with the consortium retaining the balance of the equity.
“The establishment of the community trust is a notable milestone for the region, as Tiger Brands remains committed to the distribution of social and economic benefits to the community of Langeberg long after the company’s exit,” it said.
Tiger Brands also committed to completing an effluent plant upgrade with a further investment of R31m. This will ensure that LAF continues to adhere to environmental regulations, it said.
Tiger Brands reopened the sale of LAF in December 2022, and management revisited all options to ascertain the commercial viability and sustainability of LAF.
“There has since been considerable effort to ensure a responsible exit from LAF, given the economic importance of this iconic business in the region, employing over 3,000 permanent and seasonal staff,” it said.
The LAF business forms part of the international segment of Tiger Consumer Brands, producing canned fruit and purées for export markets, and locally supplying the Tiger Brands culinary business unit.
“The success of this transaction will ensure the sustainability of the deciduous fruit industry of SA and consequentially improve the livelihoods of the LAF employees and the broader communities in these areas,” it said.
One of the conditions of the deal is that Tiger Consumer Brands and the purchaser enter into a contract manufacturing agreement for the purchase of canned fruit under the KOO brand, which is sold into the Southern African markets.
The conclusion of the transaction will enable management to deploy capital and allow focus on categories that meet its financial hurdles in terms of the company’s capital allocation framework. This will ultimately enable greater focus on the core business to ensure the delivery of sustainable growth, it said.
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.