Tiger Brands sells polony business to Country Bird after listeriosis crisis

Boxes of Jungle Oats, one of Tiger Brands’s original products. Picture: REUTERS/MIKE HUTCHINGS
Boxes of Jungle Oats, one of Tiger Brands’s original products. Picture: REUTERS/MIKE HUTCHINGS

Tiger Brands has sold its processed meat factories and inventories, previously linked to the listeria outbreak, to chicken business Country Bird Holdings for about R311m in what it termed a “good price”. 

Tiger Brands said on Monday it has reached an agreement with two parties to dispose of its value-added meat products businesses and inventories for R428m. Country Bird, which was established in 2003, is one of the largest poultry and animal feeds producers in Africa.

The owner of the Enterprise, Beacon chocolate and Oros brands has agreed to sell its abattoir business to pork producer Molare for R100m, while it will sell meat-processing facilities for R153m to Silver Blade, a wholly owned subsidiary of unlisted poultry group Country Bird. Silver Blade will pay an additional R158m for the product inventories. 

The world’s deadliest listeriosis outbreak linked to a Tiger Brands Enterprise meat-processing factory in 2018 left 216 people dead.

The company was ordered to recall its processed meats and shut its factories after the National Institute for Communicable Diseases and the World Health Organisation confirmed the Polokwane factory was infested with the specific strain of listeria bacteria linked to the outbreak. Tiger Brands had not told consumers of a recall of listeria-infected chicken polony from its factory weeks earlier. 

Its share price plunged 40% in 2018.

Analyst Anthony Clark said Country Bird had scored a good deal as Tiger Brands really wanted to get rid of its processed meat business. “To me it seems like they paid a very, very low price for a business which in theory could add material upside benefits to Country Bird Holdings.”

In 2017, before the listeria outbreak and factory closure, value-added meats made up 20% of its consumer food business, which saw revenues of R11.1bn. This suggested  it sold more than R2bn worth of viennas and polony in a single year. 

The CEO of Country Bird Holdings, Marthinus Stander, said: “It’s a good acquisition at a good price for our expansion drive.”

Stander said the Tiger Brands factories that make processed meat and premium ready-to-eat products “integrated” well with  Country Bird’s chicken products.

For example, polony is made with mechanically deboned meat that is essentially chicken, much of which is imported. 

Asked about the risk of another listeria outbreak at the Enterprise factory, Stander said “managing the risk of food-borne disease is not new to us”. 

“We are used to the risk associated with meat. Whether it is polony or chicken, you have to have the right protocols in place. You have to manage the risk of bacteria.” 

Stander also said affordable protein such as polony and vienna sausages was “highly relevant to consumers due to the economic consequences of Covid-19”.

The Enterprise factories also make high-end ready-to-eat meat and home meal replacement products, which are popular at the moment, he said, and there was space in the Germiston factory to add more product lines.

Country Bird Holdings recently bought a 32.1% stake in Quantum Foods, a poultry, animal feeds and egg business, for R308m.

Stander said the company, which operates in seven other African countries, had always been “entrepreneurial”.

“We have always been on a big expansion drive,” he said.

Tiger Brands said in 2019 the value-added meat products business, which is losing money, had previously been earmarked for evaluation. However, the temporary closure of facilities due to the coronavirus outbreak had delayed this.

Tiger Brands is facing a class-action lawsuit due to the listeria outbreak linked to its Polokwane factory, but it has denied liability.

It said on Monday the new owners are indemnified from the legal process.

“In terms of the two transactions, any potential liability under the class action will not transfer to the new owners or as part of the agreements.”

Despite the lengthy court battle, it said: “Tiger Brands remains committed to following due process to ensure that an equitable resolution of the matter is reached in the shortest possible time.”

In morning trade on Monday, the share price of Tiger Brands was up 0.63% to R180.24, having fallen 55.11% over the past three years.

childk@businesslive.co.za
gernetzkyk@businesslive.co.za


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