Premier Group says it is not done shopping. Even as it prepares to integrate RFG Holdings, the maker of Rhodes juices and Bull Brand corned meat, the food producer said it still has room and the appetite for more acquisitions at a later stage as it pushes ahead to become a major consolidator and contender in SA’s food sector.
According to CFO Fritz Grobbelaar the group will “always look for the right opportunities” and has enough financial flexibility to act when the right deal comes along.
He said the group is focused on “bedding down” RFG first.
“We are continuously looking around to see what options are available…. But there is nothing specific in the pipeline that I can tell you is the next deal,” he said.
The comments come just weeks after Premier announced its plan to buy RFG in a deal that will create one of the country’s largest food groups, competing directly with Tiger Brands, with combined annual earnings of about R4bn from its core operations. The move will give Premier a bigger foothold in the packaged foods market and add well-known brands in fruit, juice and ready meals to its portfolio, which already includes Blue Ribbon, Snowflake and Iwisa.
We’ve got ample opportunities to expand the business, even internally.
— CFO Fritz Grobbelaar
Grobbelaar said the integration would take about one to two years and focus on cutting overlap in buying, logistics and distribution.
Premier’s strong balance sheet is giving it the flexibility to think beyond the RFG deal. Over the past year the group has cut its debt, bringing gearing down to 0.7 times from 1.9 times a year ago. It also declared a one-off dividend and announced plans to buy back shares at up to R154 each, signalling confidence in future growth.
Grobbelaar said the company would decide in time what to do with excess cash flow. Options included acquisitions, special dividends and share buybacks.
“I don’t think we’ve got the bandwidth to do another RFG soon. Maybe later on, but not at the same time,” he said.
Premier is also strengthening its base operations. It said on Tuesday that the long-delayed Aeroton mega-bakery, one of the largest in Africa, would go live this month. The new facility, based in Gauteng, is expected to improve efficiency, boost output and support future growth.
The plant will replace several older bakeries in the region and help lower production and distribution costs. Grobbelaar said the bakery would also free up capacity for innovation and new product lines.
“We’ve got ample opportunities to expand the business, even internally,” he said.
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