A three-way merger between SPC, Original Juice and Nature One will create a new food giant
In a strategic play to survive SPC, Original Juice and powdered milk business Nature One will combine to create a new food manufacturing company on the ASX.
In a strategic play to survive, canned food company SPC, The Original Juice Co and powdered milk business Nature One will merge to create a new, bigger food manufacturer that will have more than $400m in annual sales and a stronger voice when dealing with the supermarket giants.
The three-way merger to be housed within the ASX-listed Original Juice Co entity will also see the iconic Australian canned food business SPC return to the stock exchange after an absence of 19 years following its ill-fated acquisition in 2005 for $750m by Coca-Cola Amatil.
The merger that will combine SPC’s leading packaged fruit, tomato-based products, baked beans, spaghetti and ready-made meals business with the Singaporean-registered dairy concern Nature One and Original Juice comes as food manufacturers struggle under the weight of rising costs, tough competition and a pull back in consumer spending.
The owners of SPC will emerge with more than two-thirds control of thew newly created food company with Original Juice shareholders to be diluted down to 15.5 per cent of the larger manufacturer.
Announced to the ASX by Original Juice on Wednesday, the deal will also see the creation of a new food manufacturing powerhouse with sales of more than $400m and more than $29m of pre-tax earnings. It will also forge a new national food maker champion that could have a stronger negotiating power with the leading supermarket chains Woolworths and Coles at a time when suppliers have been complaining about their treatment by the heavyweight grocery chains.
On Wednesday Original Juice, chaired by former Victorian Premier Jeff Kennett, unveiled the three way merger, which will require the approval of shareholders and promises vast economies of scale and efficiency savings.
Mr Kennett will retire on completion of the deal and on Wednesday said the merger would help a key food maker survive.
“The agriculture industry is a core pillar of our national identity in Australia and the backbone of many regional towns across the country,” he said.
“We should be supporting businesses like Original Juice, SPC and Nature One to continue to thrive in their mission to support local growers, employ Australians in our processing plants and produce iconic healthy products for consumers, both in Australia and abroad.
“I am excited about the prospects of the combined business.”
Original Juice is a leading juice maker and manufactures a range of high-quality juices, fibres, infused fruits and fruit waters that are sold as branded products or ingredients to customers domestically. Nature One is a Singaporean-registered, Australian-founded dairy business with powdered and baby formula milk products produced in Australia and sold extensively throughout Asia.
Upon completion of the deal current SPC chairman Hussein Rifai would remain in that role and SPC managing director Robert Iervasi would become global managing director of the combined business charged with leading the strategic direction of the company.
Mr Rifai led an investment team that bought SPC from Coca-Cola Amatil five years ago for around $40m. Mr Iervasi is the former boss of Asahi Beverages, Australia’s largest brewer with brands such as Victoria Bitter and Carlton Draught.
As part of the merger transaction, Original Juice intends to undertake a 10:1 consolidation of its shares and issue 133 million shares (on a post consolidation basis) to the shareholders of SPC as consideration for the transaction.
Concurrently with the acquisition of SPC, Original Juice intends to issue up to 29 million shares (on a post consolidation basis) and pay cash of up to $6m to the shareholders of Nature One to acquire that business.
Upon completion of the merger and share issues, Original Juice, SPC and Nature One shareholders are expected to hold 15.5 per cent, 69.2 per cent and 15.3 per cent of the combined business respectively.
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