2 not so small acquisitions

Bidvest announced two separate deals yesterday. First things first, Bidvest are buying a 60 percent interest in an Italian foodservice provider Gruppo Dac S.p.A. or DAC and a significant controlling interest in a chilled product storage and distribution business in the UK, PCL 24/7 for 95 million Pound Sterling. I guess a significant controlling interest is around one quarter to one third, but it could be as much as 49 percent. In this case I reckon 30 odd percent is a good guess.


95 million Pounds is equal to 1.741 billion Rand, roughly 1.86 percent of the market capitalisation of Bidvest. It is neither hugely material, nor is it very small, it is a lot of money to anyone. It raises two interesting points, one, the group is not finding too many opportunities in food services around these parts, meaning Europe is still an attractive destination to Brian Joffe and his fabulous team, and two this is classic Bidvest. When we covered and explored the size and scale of the Bidvest consortium buying a stake in Adcock Ingram, 34.5 percent of the current market cap of the pharma company is a mere 3.13 billion Rand.


Roughly speaking, this deal announced yesterday is 55 percent of the value of the current Adcock Ingram stake. But yet it hardly gets a mention anywhere. The Adcock deal was huge, from a talking point of view, but in monetary terms it is hardly bigger than this. If you recall our write up on the company, Bidvest that is, we wrote about The Magician of Melrose Arch and the full year results. 29.6 billion Rand revenue (out of 89.6 billion Rand at a group level) came from their European Food services segment, with the Asia Pacific sales 16.4 billion Rand.


Collectively, their international food services businesses represent 51.3 percent of group sales. At an operating profits level however, these two regions represent only 29.4 percent of the group. South Africa, all the collective businesses here (other than food services), still constitute 56.6 percent of group profits. So whilst revenues for their international businesses are far greater, their profits are not. Small bolt on deals like these will see to it in time that this business becomes more international and looks to grow the Bidvest culture across the globe. And of course diversify your country risk.