Woolworths Holdings Limited (WHL) has announced its intention to acquire 100% of the shares in privately held prepared foods manufacturer In2Food from the founders, Old Mutual Private Equity (part of Old Mutual Alternative Investments Proprietary Limited) and other existing shareholders.
In2Food is a South Africa-based supplier of convenience foods and one of the most important suppliers to Woolworths Foods.
In2Food generates over R5bn of revenue per year through its diverse range of premium private label products across freshly prepared convenience foods, fresh produce and long life categories as well as a number of ambient and bakery products.
Woolworths Food is In2Food's largest customer, its customers include other local and international companies in the foodservice and wholesale channels.
Roy Bagatini, CEO of Woolworths Group, said: “Woolworths and in2Food share over three decades of partnership in creating products of outstanding quality and innovation to meet the evolving needs of our customers. This acquisition represents an exciting opportunity to bring a key strategic capability closer to the Woolworths Foods business, strengthening one of the key points of differentiation in our premium food offering.”
In2Food has an experienced senior leadership team with deep, multidisciplinary expertise in the food sector. The management team will continue to lead In2Food as a standalone operating business within Woolworths, ensuring continuity of operations while preserving the entrepreneurial culture that has underpinned its success.
“Woolworths and in2Food have an extended track record of close collaboration, focused on delivering high-quality, innovative food products in line with the premium positioning of Woolworths Foods,” said Richard Cooper, CEO of in2Food.
“The transaction further enhances Woolworths Foods' ability to protect the product quality, innovation and availability that are core to its differentiated customer proposition. We look forward to deepening our decades-long relationship with Woolworths, and will continue to put innovation, value and quality at the heart of the Woolies Foods journey.”
Cooper added, “This transaction brings to a conclusion more than three decades of partnership with Old Mutual Private Equity and the other exiting shareholders. We would like to thank the outgoing shareholders for being very supportive partners, contributing meaningfully to the commercial rigor we have applied to key decisions along In2Food's growth journey since 2015.”
Bagatini stressed that the acquisition does not signal a change to Woolworths' broader food sourcing model.
“Our unique relationships with our suppliers are what sets us apart, and is fundamental to delivering our premium food offering. This transaction further enhances our relationship with one of our most innovative suppliers, and will provide mutual benefits to our entire value chain and end-customers.”
It is anticipated that the acquisition will be accretive to Woolworths Group's earnings, even before the envisaged operating efficiency gains, which will be realized over time.
The purchase consideration will be settled in cash, utilizing the Group's existing financing facilities. The conclusion of the transaction is subject to the fulfillment of both regulatory and commercial ambiguities customary to transactions of this nature, including approval by the South African competition authorities.
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