Woolworths buys South African food giant making R5 billion a year
Woolworths Holdings Limited plans to acquire 100% of the shares in the privately owned prepared foods manufacturer, In2food.
Woolworths will buy In2food from its founders, Old Mutual Private Equity (OMPE) and other exiting shareholders.
In2Food is a South African-based, market-leading supplier of high-quality convenience foods and is one of Woolworths Foods’ most important suppliers.
In2Food generates revenue of over R5 billion per annum through its diversified range of premium private-label products across convenience food, fresh produce, long-life, and bakery categories.
In2Food’s partnership and collaboration with Woolworths dates back to the early 1990s. In2Food itself was formed through the merger of Interfruit and Lombardi Foods in 2010.
Woolworths Food is In2food’s largest customer, with the remaining customers comprising other local and international companies across the foodservice and wholesale channels.
“Woolworths and In2food share a more than three-decade history of partnership in creating products of outstanding quality and innovation to meet the evolving needs of our customers,” said Woolworths Group CEO Roy Bagattini.
“This acquisition represents a compelling opportunity to bring a key strategic capability closer to the Woolworths Foods business, strengthening one of the core points of differentiation in our premium food offering.”
Woolworths said that In2food has an experienced senior leadership team with deep multi-disciplinary expertise across the food sector.
The management team will continue to lead In2food as a standalone operating business within Woolworths, and aims to ensure continuity of operations.
“Woolworths and In2food have an extended track record of close collaboration, focused on delivering high-quality, innovative food products aligned with Woolworths Foods’ premium positioning,” said Richard Cooper, CEO of In2food.
“The Transaction further enhances Woolworths Foods’ ability to protect product quality, innovation and availability, which are core to its differentiated customer proposition.”
Bagattini said the acquisition does not signal a change in Woolworths’ broader food-sourcing model.
“Our unique relationship with our suppliers is what differentiates us and is fundamental to delivering our premium food offering,” he said.
“This transaction further enhances the relationship we have with one of our most innovative suppliers, and will extend mutual benefits to our entire value chain and end-customers.”
Woolworths said the deal will be earnings accretive to the Woolworths Group, even before the benefits of envisaged operational efficiencies, which will be realised over time.
The purchase consideration will also be settled in cash, utilising Woolworths’ existing financing facilities.
The conclusion of the deal is subject to both regulatory and commercial suspensive conditions, including the approval from the competition authorities of South Africa.
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