Shares in food producer Libstar surged as much as 16.6% on Tuesday after the company said it was considering a possible takeover bid.
The rally lifted the stock by the most in three months by market close, gaining 14.47% to R4.35. Even so, Libstar’s valuation has fallen 64% since its 2018 listing, leaving its present market capitalisation at R2.64bn.
The gains came after Libstar told investors it had received non-binding expressions of interest from potential buyers for all of its issued shares. The group said the talks were still at an early stage and may not lead to a binding offer.
CEO Charl de Villiers said day-to-day operations and the group’s longer-term strategy remained unaffected by the process.
“We remain fully committed to delivering strong performance through the execution of our plans,” he said.
The group highlighted progress in cutting costs and simplifying its portfolio, such as consolidating gifting production into its main condiment plant.
De Villiers said it was also rolling out new products, including Red Lion stock powders and expanded dry ranges under the Denny brand, while pushing ahead with export initiatives.
Still, consumer pressure remains intense, with food inflation and weak spending weighing on the sector. Libstar said it expected beef prices to stay elevated, although some contract manufacturing arrangements shielded parts of its business.
The update came alongside the group’s results for the six months to end-June, which showed a 6.7% rise in revenue to R5.96bn, while its gross profit margin improved to 21.6% from 20.7%. Normalised headline earnings per share (HEPS) increased 15.4% to 23.2c.
Cash generation was a standout, with the group’s cash conversion ratio jumping to 110% from 57% in the same period last year, helped by normalised dairy inventories and tight capital allocation. Net debt fell to 1.3 times normalised earnings before interest, taxes, depreciation and amortisation from 1.6 times previously.
Libstar said it had managed to hold or grow market share in categories such as dairy and condiments, supported by better raw material procurement, improved factory utilisation and disciplined pricing. New product ranges were also rolled out across retail, wholesale and food service channels.
Still, the company said the retail market for its product basket had shown a downward value trend beyond the reporting period, reflecting continued pressure on consumer spending. It said it would focus on further efficiencies, innovation, export growth and supply chain resilience to counter rising costs.
No interim dividend was declared, in line with the group’s policy of paying a single dividend at year-end.
Update: September 16 2025
This story has been updated with closing share price data.
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