200-year-old South African food giant gets the green light to buy its competitor
The Competition Commission has recommended that food group Premier’s acquisition of competing producer RFG be approved by the Competition Tribunal.
Premier owns several iconic food brands in South Africa, including Mister Sweet, Iwisa, Super C, Blue Ribbon, Rascals and many more. The company was founded in 1824 as a bakery.
RFG, on the other hand, has Rhodes Quality, Magpie, Bull Brand, Mama’s Pies, and several others with production facilities in South Africa and Eswatini.
In October, Premier announced an offer to acquire all of RFG’s ordinary shares in exchange for Premier’s ordinary shares.
It said that the combined group would have a combined annual revenue of roughly R28 billion and profit after tax of approximately R1.8 billion, which Premier argued would increase the scale of its operations.
The senior RFG management team would remain in their positions to continue running RFG operations as part of Premier.
For RFG shareholders, the Scheme Consideration represented a premium per RFG share of:
- 35.6% based on the closing prices of a Premier Share and an RFG Share on 14 October 2025 of R153.28 and R16.15, respectively;
- 37.5% based on the 30-day volume-weighted average price (‘VWAP’) of a Premier Share and an RFG Share to 14 October 2025 of R148.45 and R15.42, respectively, and
- 7.2% based on the VWAP of a Premier Share and an RFG Share since 16 September 2025, of R153.50 and R15.98, respectively, being the date that both companies released trading updates.
Premier added that the acquisition of RFG and the issuance of new Premier shares will increase the company’s free float on the JSE, further boosting liquidity in its shares.
The Competition Commission recommended that the Competition Tribunal approve the deal, subject to conditions.
The commission said that the transaction is unlikely to lessen or prevent competition in any market.
To address employment concerns, the parties will also undertake not to retrench any employees as a result of the merger for a period of three years.
Premier is also committed to increasing its combined annual spend on enterprise and supplier development initiatives over the three-year period from the merger implementation date.
Deal looks good
Sean Culverwell, Investment Analyst at Anchor Capital, said that Premier is headlined by its flagship Blue Ribbon brand, making it the “Shoprite” of milling and baking.
“The company’s growth strategy hinges on three core drivers: single-digit revenue growth, operating margin expansion, and declining finance costs,” said Culverwell.
“Premier’s consistent execution against these levers has delivered industry-leading growth since its listing, a trend we anticipate will continue through the coming year.”
Anchor Capital said that the deal makes strategic and financial sense, given the limited liquidity in Premier shares and the concentration risk associated with Millbake.
A consolidation with RFG addresses limited liquidity and concentration risk while also providing immediate earnings accretion.
“The industrial and route-to-market synergies between the two companies are obvious on paper, but such benefits are often difficult to deliver in practice.”
“However, CEO Kobus Gertenbach and his team have given us little reason to question their execution, so we look forward to seeing what Premier can achieve with the consolidated entity.”
Moreover, with the deal being a share swap, rising cash on the balance sheet should also present an opportunity for management to increase the dividend payout ratio or buy back shares.
“Both of which would be the cherry on top of what is an already enticing investment case,” said Culverwell.
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