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LISTED food-processing giant National Foods Holdings Ltd is confident it will push through its tie-up with stockfeeds producer Profeeds in the next few months. It is envisaged that NatFoods and Profeeds will each sell their respective stockfeed manufacturing assets and lease immovable property to the new company – African Feed Mills Private Limited.
The new entity – valued at more than US$10 million – is expected to maximise on efficiencies and strategically position itself for competition from Agrifoods and Blue Ribbon Industries.
African Feed Mills will operate as a separate unit with Natfoods taking up a 40 percent stake in the new company and Profeeds the remainder. NatFoods CEO Mr Michael Lashbrook told The Sunday Mail Business that the company is tying up the loose ends before the deal is completed.
“Currently the transaction is still undergoing the necessary regulatory approvals to make sure that the merger will be functional in the next shortest possible time. Under this deal we are proposing to combine our stockfeed manufacturing operations with Profeeds to form a new entity.
“This new entity will manufacture stockfeed on behalf of National Foods and Profeeds. NatFoods and Profeeds will continue to operate the sales and marketing components (including their stores and depots) of their businesses independently and will continue to compete in the market.
“The proposed transaction will benefit stockfeed consumers as it will create a world class feed manufacturing business,” said Mr Lashbrook.
The proposed merger is unique in that NatFoods and Profeeds will remain separate and effectively compete in the wholesale and retail market for stockfeeds.
Even if the parties decide to exit the stockfeeds business, the new company will continue to manufacture as well as wholesale and retail the product.
Also, NatFoods and Profeeds will maintain their main line of business other than stockfeed. The shareholding in each of the businesses will remain the same.
This year NatFoods completed acquisition of Breathaway Food Caterers, which produces Iris biscuits, and Zapnax, Wingz and Kurls corn snacks.
The company has also bought a 40 percent stake in Pure Oils Industries, one of Zimbabwe’s largest cooking oil producers.
Online Reporter