Danish Crown subsidiary takes stake in South African foodservice company

Food acquisition news : ESS-Food, a subsidiary of Danish food processing company Danish Crown, has struck an agreement to acquire a stake of 70% in South African foodservice company Overberg Food Distributors.

The financial terms of the deal were not disclosed by the parties.

Headquartered in Cape Town, Overberg Food Distributors buys, stores, sells and delivers a variety of more than 700 food products. This South African foodservice company caters to around 2,000 customers, located predominantly in the southern region of the country.

ESS-Food, which otherwise has been a pure trading company until the deal, will be foraying into the South African foodservice industry with the stake in Overberg Food Distributors.

ESS-Food and Overberg Food Distributors deal. Photo courtesy of Danish Crown.

Commenting on the company’s acquisition of stake in the South African foodservice company, Morten Holm – the CEO of ESS-Food 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, which is a leading Danish meat processor, plans to grow the activities of Overberg Food Distributors in the future so that it spreads its services to all regions in South Africa.

The meat processing company is also looking at Overberg Food Distributors to act as its bridgehead in the African continent where countries in the western part are considered to have specific potential.

Danish Crown earned revenue of nearly $95.4m in Africa in 2015/16. This includes $24m worth of meat, weighing 25,000 tonnes that were sold by ESS-Food in South Africa in the period.

Jais Valeur – the CEO of Danish Crown Group on the ESS-Food deal with the South African foodservice company, 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.”

Guy Osler, who is the founder and owner of Overberg Food Distributors will retain a stake of 30% in the South African food service provider and will keep his role of its CEO.

Overberg Food Distributors has cold stores in Cape Town and Port Elizabeth and has a workforce of 250 people. The South African foodservice company which was founded 25 years ago, boasts of revenues of about $55.7m a year.

Closing of the ESS-Food deal with Overberg Food Distributors will be subject to approval of the South African authorities.

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