By Lehlohonolo Lehana.
Tiger Brands has, through its wholly owned subsidiary Inversiones Tiger Brands South America, agreed to sell its 24.38% interest in Chile-based fast-moving consumer goods group Empresas Carozzi, to Carozzi, which owns the other 75.61% shareholding in Empresas Carozzi, for $240-million, or about R4.44-billion.
Tiger Brands is South Africa’s largest food producer and owns well-known brands like Jungle, Tastic, Doom, All Gold, Oros and KOO.
Founded 126 years ago, Carozzi is a leading, fast-moving consumer goods group based in Chile. It operates in the grains, confectionery, sauces, dressings, baked goods, powdered beverages, ice cream, and pet food categories.
Carozzi produces and markets food products in various countries throughout Latin America. Carozzi SA holds a 75.61% shareholding in Carozzi.
Tiger Brands initially invested in Carozzi in 1999 to expand into Latin America and leverage mutual, research and development learnings.
The company said Carozzi has performed pleasingly over the past 20 to 25 years, delivering notable returns and dividends.
However, Tiger Brands said that as part of its new “vision”, it is refocusing its strategy on becoming Southern Africa’s leading consumer goods company.
Therefore, further expansion into the Latin American region is no longer a strategic priority for the company.
In addition, Tiger Brands’ portfolio optimisation strategy is underpinned by ensuring the company focuses on and deploys capital and resources in the areas within which the company has direct control.
“Accordingly, following an extensive strategic and financial review, the decision was made to pursue a disposal of Tiger Brands’ interest in Carozzi,” the company explained.
Tiger Brands said the proceeds from the sale will be reinvested in its core business to support strategic projects aimed at enhancing competitive advantage and returns.
“Excess funds may be returned to shareholders via share buybacks or special dividends,” it said.
Tiger Brands will get $240 million (about R4.44 billion) from selling its shares in Carozzi. This amount is split into two parts:
- $181 million (around ZAR 3.35 billion) for the actual sale of its shares.
- $59 million (around ZAR 1.09 billion) as its share of an extraordinary dividend that Carozzi is paying to all shareholders.
“The transaction provides an ability for Tiger Brands to crystalise the value of its investment in Carozzi at an attractive valuation and marks another milestone in the simplification of Tiger Brands’ portfolio,” the company said.
Tiger Brands is currently on a turnaround plan set to restore the food producer’s former glory.
The company has faced numerous challenges in recent years, including failed investments, management issues, and economic pressures.