French Fry Manufacturer Lambert's Bay Foods acquired by Famous Brands

in South Africa, Famous Brands has acquired 100% of the business of Lamberts Bay Foods (LBF), a wholly-owned subsidiary of the Oceana Group Limited (Oceana).

The company processes French fries and other value-added potato products at its factory in Lambert’s Bay, Western Cape, for sale to wholesalers, retailers and restaurant chains. LBF is one of only three French fries manufacturers in South Africa. The business has supplied product to Famous Brands for the past 20 years and has on several occasions been recognised as a Supplier of the Year in the Group’s annual Awards competition.

Lamberts Bay Foods was established in 1995 by Oceana, as a social responsibility project to offset job losses resulting from the decline in fishing employment opportunities in the region, and has subsequently matured into a viable commercial operation.

Today Lamberts Bay Foods is the single largest employer on the West Coast north of St Helena Bay, employing 305 people. In addition, approximately 2 250 jobs are created on a national scale through the Lamberts Bay Foods operation. Lamberts Bay Foods staff who are currently beneficiaries of the Oceana Empowerment Trust will not be affected by this transaction and will continue to receive their share of the benefits.
 

Kevin Hedderwick

Kevin Hedderwick, Famous Brands’ Group Strategic Advisor with responsibility for M&A activity:
 

“Acquiring Lamberts Bay Foods is a major coup in terms of advancing the Group’s stated goal to build capability and capacity across our Logistics and Manufacturing Supply Chain operations.”

“This acquisition not only affords us security of supply of a key strategic menu item for our franchised network, it also provides us with an existing food services and retail customer base, which has significant expansion potential over time.”

The purchase consideration falls below the threshold of a categorised transaction in terms of the Listings Requirements of the JSE Limited and will be settled from cash reserves. The transaction is subject to Competition Commission approval, whereafter all suspensive conditions will have been fulfilled.

Francois Kuttel, CEO Oceana:
 

“Famous Brands has enjoyed a long relationship with Lamberts Bay Foods, having been our biggest customer for a number of years.”

“Our motivation to do this transaction with Famous Brands was our tacit recognition of their ability to maintain and grow Lamberts Bay Foods in line with their core business. The acquisition strengthens Lamberts Bay Foods potential for growth and enhances the long-term certainty of product off-take that only a company of Famous Brands’ market leading position can provide.”

“I am confident that the future of the business is in very good hands and that Lamberts Bay Foods will continue to expand under Famous Brands’ expertise. This transaction enhances the long term job security of the staff as well as the positive impact that the business has on the Lambert’s Bay Community,”

Kevin Hedderwick:
 

“Although the South African potato processing industry is growing rapidly to meet increasingly strong demand fueled by the brisk growth in food services and the convenience market, it lags its peer industries in developed countries and illustrates the growth potential for the Lamberts Bay Foods business.”

Currently, Lamberts Bay Foods processes some 24 000 tons of potatoes per annum. Potatoes are sourced mainly from Mpumalanga, Limpopo, Free State and the Sandveld region of the Western Cape.

Long-term relationships with growers close to Lambert’s Bay are one of the business’s key strategic advantages and accordingly, an ongoing development initiative.
 

Quality Assurance at Lamberts Bay Foods is at a very high level. The facility has been awarded the SANS 10330 (HACCP) accreditation, it follows FSA Audit Guidelines, and complies with industry benchmarks, FSSC 2000 as well as GFSI.

Kevin Hedderwick:
 

“The Lamberts Bay Foods plant operates according to best practice standards and is regarded by customers as having the lowest product-defect level in the industry.”

“Quality Assurance is at a very high level. The facility has been awarded the SANS 10330 (HACCP) accreditation, it follows FSA Audit Guidelines, and complies with industry benchmarks, FSSC 2000 as well as GFSI.”

“Our goal is to ensure continued quality and consistency of product for all of Lamberts Bay Foods customers. The existing operation has a good record of accomplishment and is well-respected and supported. The plant integrity and condition is exceptional, and while we have identified opportunities to enhance and up-scale the business, there is no intention to move the facility, or alter arrangements with Lamberts Bay Foods employees or growers.”

“They are key contributors to the success of Lamberts Bay Foods and we look forward to welcoming them into our Group.”

Kuttel adds, “We are delighted that this transaction will benefit all parties. Given Famous Brands’ extensive experience in managing supply chain businesses, we are confident that they will unlock further value for all stakeholders.”

Hedderwick concludes, “Famous Brands’ management has set an audacious operating profit target of R1 billion by February 2018 – this acquisition will make an important contribution to achieving that goal.”