The Tiger Brands Albany Bakery at Belville in the Western Cape. The group is repositioning to focus on its Southern Africa fast moving consumer goods business activities. Picture: Ayanda Ndamane/Independent Newspapers
Tiger Brands’ R4.4 billion sale of its investment in Chile-based Empresas Carozzi might result in its shareholders benefiting from share buybacks or special dividends once the group’s investment requirements are met.
On Tuesday, Tiger Brands announced plans to sell its 24.38% stake in Empresas Carozzi for $240 million (about R4.4bn) to the parent of the Chile-based company, the Santiago Stock Exchange listed Carozzi S.A.
The South African manufacturer and marketer of fast-moving consumer goods has well-known brands in the country, including Koo, Fattis and Monis, Jungle Oats, Enterprise and Oros.
The group said on Tuesday that the sale was part of its decision made only last month, to revise strategy and focus on operations in Southern Africa.
Tiger chairperson, Geraldine Fraser-Moleketi, writing in the annual report, said progress on a turnaround strategy at Tiger had been “pleasing,” a process that had followed the appointment of Tjaart Kruger as CEO in November 2023 and subsequent new appointments to the leadership team in February 2024.
The group’s investors also appear to view the change of strategy and sale of the Chile investment favourably, as the share price increased 1.78% to R279.79 around midday on Tuesday, bringing the share price a solid 39% higher over 12 months.
“Proceeds will be deployed in the group on various projects, but excess cash will be returned to shareholders in the form of share buybacks and/or special dividends,” Tiger’s directors said in a statement.
In November, the group also sold its Baby Wellbeing business for R605m.
The stake in Empresas Carozzi had initially been acquired in 1999, mainly to help expand Tiger Brands' geographical presence in Latin America.
Other objectives for the overseas shareholding were to drive a “connect and develop” research and development model, where key learnings could be leveraged from Carozzi.
“Carozzi has performed pleasingly over the past 20 to 25 years, delivering notable returns and dividends over this time,” Tiger’s directors said.
In December 2024, with the decision to grow as Southern Africa’s leading consumer goods company, further expansion into the Latin American region was no longer a strategic priority for the group.
In terms of the latest transaction, Tiger’s subsidiary, Inversiones Tiger Brands South America Limitada, entered into a share purchase agreement for the disposal of its 24.38% interest in Empresas Carozzi S.A. to Carozzi S.A.
Founded 126 years ago, Carozzi is a leading Chilean-based fast-moving consumer goods group in the grains, confectionery, sauces, dressings, baked goods, powdered beverages, ice cream, and pet food categories.
Tiger said that, in addition to its Southern Africa focus, its optimisation strategy was underpinned by ensuring that it focuses on and deploys capital and resources in the areas in which the company has direct control.
Tiger’s directors said the deal provided an opportunity to realise the value of the investment at an attractive valuation “and marks another milestone in the simplification of Tiger Brands’ portfolio.”
In Tiger Brands’ annual report for the year to September 2024, the value of the assets in the transaction was R3.03bn.
The group’s portfolio would also continue to be refined through targeted disposals, where these businesses were deemed non-core, its directors said.
The $240m transaction price comprises a $181m purchase price and the seller’s pro rata portion of the extraordinary dividend, being $59m.
The turnaround strategy over the past year has entailed a more streamlined operating model, with six business units, and the simplification of roles between the business units and the various enabling functions, such as marketing and strategy, corporate affairs, and legal, all of which had improved the speed of execution, strengthened accountability, and delivered cost savings, Fraser-Moleketi said.
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