Denmark-based Danish Crown through its subsidiary ESS-Food has agreed to buy 70% stake in Overberg Food Distributors, a South African foodservice business, for an undisclosed price.
Overberg Food Distributors, which is based in Cape Town, purchases, stores, sells, and delivers a range of over 700 food products to nearly 2,000 customers, located mainly in the southern part of South Africa.
Through the transaction, the Denmark-based ESS-Food, which has been a pure trading firm until now, will be making a mark for the first time in the South African foodservice sector.
ESS-Food CEO Morten Holm said: “For several years we have enjoyed stable sales to South Africa. This prompted us to look at the possibility of entering the market for the sale and distribution of meat, which we now have acted on by acquiring a 70 per cent stake in Overberg Food Distributors.”
Danish Crown says that the plan for Overberg Food Distributors, for the long run, is to grow its activities to cover all parts of South Africa.
The Danish meat processor also expects the foodservice company to act as its bridgehead in Africa with Western African countries thought to have particular potential.
Danish Crown Group CEO Jais Valeur said: “It's important for Danish Crown as a group to create a strong foundation for future business on the African continent.
“In doing so, we’ll be able to benefit from the economic growth which is expected in Africa in the coming decades.”
Overberg Food Distributors employs 250 people and maintains cold stores in Cape Town and Port Elizabeth. Established 25 years ago, the company earns around DKK350m ($55.7m) a year.
Overberg's founder and owner, Guy Osler, will hold a stake of 30% in the company post transaction and continue to be its CEO.
In Africa, the Danish Crown group made revenue of about DKK600m ($95.4m) in 2015/16 which included 25,000 tonnes of meat sold by ESS-Food for DKK150m ($24m) in South Africa.
The transaction would need approval of the South African authorities for its completion.
