New food brands conglomerate?

One of the smallest food companies on the JSE, AH-Vest (formerly All Joy), has had a change of control that might lay the foundations for a new consumer brands conglomerate, reports the Financial Mail.

Recently Eastern Trading Co bought a controlling 56,92% stake in AH-Vest from the liquidators of failed investment company African Heritage Investments.

This is the second time in recent years that control of a JSE-listed company has changed hands in the liquidator’s office, a similar transaction having transpired at (now delisted) Venter Leisure & Trailers.

The value of Eastern Trading’s purchase was not disclosed. But it could not have been enormous, considering AH-Vest’s value on the JSE has dribbled down to just R11m. The terms of Eastern Trading’s acquisition will eventually need to be disclosed, however, as the company looks determined to pitch an offer to buy out the remaining minority shareholders of AH-Vest.

Things could get quite interesting, says the Financial Mail, if AH-Vest’s minorities resist the buyout offer. AH-Vest’s bigger shareholders include Farm Food Holdings (with a 23,34% stake) and the National Empowerment Fund (7,7%). It seems unlikely either will relinquish their equity positions unless Eastern Trading pitches a very generous offer.

A clue to the rationale for Eastern Trading’s investment in AH-Vest seems to lie in its association with a food canning company called Dursots in Johannesburg. Dursots is controlled by the Darsot family.

Ismail DarsotCEO Ismail Darsot (left) says that even if AH-Vest minorities decline the buyout offer there are no plans to inject parts of the Dursots business into the listed company. “You can never say never in business, but right now there are no such plans.” Darsot concedes, though, that AH-Vest’s All Joy brands do complement Dursots’ existing product lines. “We’ve always liked their brands.”

Dursots’ brands include a variety of canned food products, which would complement AH-Vest’s core business of bottling popular All Joy tomato-based condiments and pasta sauces.

Dursots’ product range has been broadened to include bottled water, sunflower oil, vinegar and peanut butter.

All Joy recently diversified into the ready-meals market and has enjoyed success with its Veri-Peri sauce range.

This could be the small beginnings of a food conglomerate – an interesting development since both companies have made strong inroads into the supermarket sector.

Source: Financial Mail