Rhodes Food Group (RFG) said on Tuesday it had agreed to buy Durban-based Pakco for R200 million in cash and shares.
Pakco manufactures and distributes spices, condiments, instant meals and complementary products in the dry packed, bottled and canned food categories under its own brands and private label. They are sold in South Africa and eight neighbouring states.
RFG said in a statement that Pakco owned “several strong, well-established brands”, including Bisto, Southern Coating and Buffalo in the dry packed category, Trotters and Hinds in dry packed desserts, Gold Dish cans and Pakco spices and pickles.
RFG said the acquisition would enhance its position in canned foods as well as in the salads and pickles categories. It added that Pakco’s dry packed products offered the opportunity to enter into a new era, in keeping with its strategy of lateral extensions into adjacent categories.
Pakco’s earnings before interest, tax, depreciation and amortisation for the financial year ended December 31, 2015, were R9.5 million on revenue of R221.5 million. Net asset value at the end of December 2015 was R83 million.
“Rhodes Food is well positioned to improve Pakco’s volumes and profitability in the medium term,” the RFG statement added.
The effective date of the acquisition is January 1, 2017.