08 Nov 16 Ajinomoto buys whopping R7.182bn stake in African food company Promasidor
Japan’s Ajinomoto has pipped PepsiCo to purchase a stake in African food processor, the Jo’burg-HQ’d Promasidor Holdings for $532m or R7,182bn, as its looks to bolster its seasonings business amid a decline in sales.
The Japanese food giant has purchased a 33.3 percent stake in Promasidor, which has a presence in 26 countries in Africa.
According to a Reuters report, Ajinomoto and PepsiCo were among bidders seeking to buy a stake in the African dairy and drinks company that would give them access to its distribution network across the continent.
The deal could value Promasidor at roughly $1-billion, said the sources quoted in the Reuters report.
The interest from the Japanese food maker and US drinks giant shows how multinationals based in mature markets are looking abroad for growth and betting that Africa’s expanding middle classes will buy more packaged food and drinks.
Ajinomoto was seen as more likely to clinch a deal than PepsiCo – and that has been the case.
According to the report, the owners of Promasidor have been looking for an investment from an industry player that would benefit from selling its own products through Promasidor’s distribution network in more than 30 African countries.
Ajinomoto, which sells MSG and other seasonings as well as frozen foods, has been vocal about its international ambitions, as its home market of Japan suffers due to an aging population and a faltering economy.
Its president told Reuters last year that it could spend up to $1.7-billion by the end of 2016 on deals to help it become a top-10 global food maker.
Promasidor was founded in 1979 by Briton Robert Rose, who left the UK for Zimbabwe in 1957.
He began selling milk powder in small, affordable sachets in Democratic Republic of Congo and the company has since grown to include a range of brands, with a strong presence in West Africa and growing business in East and Southern Africa. Its headquarters are in Bryanston, Jo’burg.
Investment fund Tana Africa Capital – founded by E Oppenheimer & Son and Singapore’s sovereign wealth fund, Temasek – owns a minority stake in the company and was looking to exit, according to Reuters’ sources.
The deal announced apparently comprises a 25 percent stake owned by Tana and the rest from some members of the founding Rose family who want to cash out of the business.
Promasidor, which mainly operates in Nigeria, Algeria, Ghana, the Congo and Angolo, makes and sells powdered milk, powdered beverages, flavour seasonings and cereals brands which are well-known in Africa.
Promasidor has around 4,000 employees. It boasts sales of around $673m a year.
Ajinomoto has identified Africa as a key growth market, as it looks to tap into its rising population which is projected to grow from 1.2bn in 2015 to 1.7bn in 2030.
Ajinomoto has already a considerable presence in Africa. It set up West African Seasoning in Nigeria in 1991, which was followed by operations in Egypt and the Ivory Coast.
Promasidor: Read more about the company here