Tiger Brands has firmed the future of 3 000 farm workers through its plan to sell its Langeberg & Ashton Foods (LAF) deciduous fruit business for R1 to a consortium of fruit growers, a community trust, and a development finance institution.
The deal will secure a future for permanent and seasonal staff who have faced uncertainty after Tiger Brands announced in 2022 that it wished to sell LAF. The deal will also benefit the farmers – the Ashton Fruit Producers Co-operative is made up of producers from Robertson, Ceres, Breederivier, and Klein Karoo.
In 2022, Tiger Brands had announced it wished to sell LAF, and options to ensure the viability and sustainability of LAF would also be revisited so that the business could be exited responsibly, given its economic importance in the region.
Tiger Brands is exiting LAF because the fruit company’s products are exported to Europe and Asia, which are outside Tiger Brands’ markets. Also, the seasonal nature of the LAF business meant its average working capital requirements were high at about R900 million a year, and the unwinding of this capital will optimise Tiger Brands’ operating cash flow.
Tiger Brands’ subsidiary Tiger Consumer Brands will sell LAF as a going concern for R1 cash to a newly formed company established by the purchasing consortium, a statement said Friday. Tiger Consumer Brands will also commit R150 million towards the establishment of a Community Trust aimed at socio-economic development initiatives benefiting the broader Langeberg community.
The R150 million commitment will enable the Community Trust to hold a 10% stake in LAF, with the consortium retaining the balance of the equity. Tiger Brands said it will also commit to a R31m effluent plant upgrade so that LAF can continue to adhere to environmental regulations.
The LAF business produces canned fruit and purees for export markets (greater than 80% of the business), and locally, it supplies the Tiger Brands Culinary Business Unit. The manufacturing site is based in Ashton in the Langeberg municipality of the Western Cape.
“The success of this transaction will ensure the sustainability of the deciduous fruit industry of South Africa and consequentially improve the livelihoods of the LAF employees and the broader communities in these areas,” Tiger’s management said in a statement.
Earlier this month, Tiger Brands said its results for the six months to March 31 will display momentum on its turnaround strategy, delivering “compelling operating profit improvement” and halting years of underlying volume decline in a majority of the Business Units.
In addition, its portfolio optimisation initiatives were also expected to drive earnings growth, with the completion of the Baby Wellbeing disposal and Carozzi equity stake sale. Headline earnings a share from total operations were expected to be between 15% and 25% higher than the 808 cents reported in the first half of 2024.
Recently, Tiger Brands and plaintiffs’ attorneys in the listeriosis litigation reached an agreement to provide interim relief to certain claimants with urgent needs by way of interim advance payments, made possible by the company’s lead reinsurer, QBE Insurance Group.
Visit:www.businessreport.co.za
