South African Investment Holding company, Coast2Coast announced the acquisition two food companies by Bounty Brands, its consumer brands business in deals totaling a reported R1.2 billion or $83.5 million. As well as acquiring South Africa’s Liberty Foods, Bounty has closed its first international acquisition with the acquisition of Sonko, a producer of rice cakes, rice, groats and dry bread products in Poland under the Sonko, Risana, Albaris and PopCool brands as well as private label business with major Polish retailers.
“Sonko is a fantastic business with a 20-year track record,” commented Stefan Rabe, Bounty’s CEO. “Not only is it the market leader in rice, rice cakes and crisp bread, but it is also making a name for itself in the fast-growing Healthy Snacks category.”
Bounty’s international expansion is part of a well-defined strategy to diversify its earnings. While the focus on growth in South Africa remains, Bounty and Coast2Coast Investments have teams active in selected international markets, searching for opportunities. Following the Sonko acquisition, Coast2Coast and Bounty Brands will now set up an office in Europe to pursue complementary acquisitions.
“We are certainly not the first local business to invest there,” continued Rabe. “In fact, Poland has been somewhat of a success story for South African businesses. It is well situated geographically and presents the right combination of opportunity and infrastructure. We look for profitable and defensible businesses, with a long track record of selling trusted brands. In Sonko we have found a business that ticks all the boxes. The fact that it is in Europe is an added bonus.”
Domański Zakrzewski Palinka advised Bounty Brands on the deal, while Sonko used the services of Weil, Gotshal & Manges and Fidea Corporate Finance for the transaction.
In their second acquisition for the week, Bounty also acquired Liberty Foods, its first South African food business. The company imports the bulk of its products under the owned Liberty elect and Chef Brands, and with branches in Johannesburg, Cape Town and Durban giving it significant distribution capabilities, the company has a number of long-term exclusive distribution agreements from brands such as Heinz, Wellington and Appletiser. The company distributes as far afield as Kenya, Zimbabwe and Zambia.
“With food services growing at 10% over the past five years, Liberty is an excellent investment….,” says Rabe, noting that the company’s broad product portfolio and well-established distribution network make it an ideal platform for future add-on acquisitions.
Together, the two food acquisitions are expected to add R850-million ($59 million) a year to Bounty’s annual revenue, bringing total revenue to just short of R2-billion ($139 million). The deals form part of the company’s strategy to grow revenue to over R5 billion in the next two years in the run-up to an eventual listing.