Bidvest Spurns Foodservice Takeover Bids, Plans Acquisitions to Grow Unit
Bidvest Group Ltd. (BVT), a South African company with interests from catering to cosmetics, spurned unsolicited bids for its Foodservice unit and will expand the business with purchases in Egypt, the Baltic region and Chile.
Bidvest shares fell 8 rand, or 5.2 percent, to 147 rand in Johannesburg, where the company is based. It was the third-worst performer today on the FTSE/JSE Africa All Share Industrials Index, which dropped 2.9 percent to 30,823.33.
“This decision may be seen as one that leaves less clarity over the Foodservice business, making its value less easy to quantify,” said Chris Gilmour, an analyst with Absa Investments, a unit of Absa Group Ltd. Even so, the “management team has a good record in ensuring value is unlocked.”
Bidvest’s board completed a strategic review of Foodservice and decided to retain the unit because it can expand its existing business and make acquisitions, the company said in a statement today. Bidvest said July 6 it was considering options for Foodservice, its top revenue earner, after receiving offers from unidentified bidders.
“In assessing the proposals the board strongly endorsed the Bidvest business model and reemphasized that a demerger shouldn’t take place if it is at the expense of critical mass and financial strength,” the company said. While a sale would have brought in “significant amounts of cash” in the short term, it wouldn’t have supported the overall business structure.
The acquisition of a food-service business in Chile marks Bidvest’s first entry into the “high-growth South American market,” Bidvest said, without giving further details on any of the purchases it announced today.
Foodservice, which contributed 58.4 billion rand ($8.2 billion) to the company’s 109.8 billion rand in sales in the fiscal year through June 2010, has operations in Europe, Australia and Asia. The unit may be worth as much as 25.9 billion rand, Macquarie First South Securities analysts Peter Steyn and David Smith said in a July 19 note, which identified Clayton Dubilier & Rice and KKR & Co. and Sysco Corp. as potential suitors.