Sea Harvest, which produces frozen fish, has announced a deal to buy Ladismith Cheese for R527 million in cash.
The dairy producer, which also makes butter and powered milk, has been doing business for almost two decades. It is owned by a number of family trusts and farmers in the Western Cape, and generated revenues of R681m in the past year.
This is Sea Harvest’s first venture into dairy, and the company said in a statement that Ladismith could be an ideal platform “from which to build on in this sector through the development and acquisition of additional dairy and allied beverage products”.
The company said that the dairy sector is expected to experience continued growing demand for cheese and butter in response to consumer dietary changes towards natural fat products. “This is a good sector to be in,” Sea Harvest chief investment officer CEO Muhammad Brey told Business Insider SA.
He said that Ladismith products will continue to be sold under its brand. “The Ladismith brand is strong and has great provenance and we will continue with it."
Sea Harvest, which is controlled by empowerment company Brimstone, and BEE partners recently spent R885m on South African group Viking Fishing which owns a fishing fleet and abalone farms. The transaction put pressure on its profitability. Sea Harvest also recently bought a stake in a Australian fishing company.
Also on Tuesday, Sea Harvest reported revenue of R1.004bn, down 5% from a year ago.
The company said the reduction in its total allowable catch (TAC) in South Africa, and the delayed start to the prawn fishing season in Australia had an impact.
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