Tiger seeks approval to buy Nestlé's sweet brands
April 6, 2006
By Samantha Enslin
Durban - Jelly Tots and Wilson's Triple-X mints will be manufactured by Tiger Brands if a deal to acquire Nestlé's sugar confectionery business is approved by competition authorities.
Nestlé yesterday announced the proposed sale of its confectionery business, which generates annual turnover of more than R110 million, to Tiger Brands, which also owns Beacon Sweets. The value of the deal was not disclosed.
Yves Manghardt, the chief executive of Nestlé southern and eastern African region, said: "Nestlé [South Africa] had decided to dispose of its sugar confectionery portfolio in order to focus on its chocolate business and to drive profitable, sustainable growth of its strong chocolate brands."
These brands include Bar One, Crunch and Milky Bar.
The acquisition has yet to be sanctioned by competition authorities, which are expected to review the deal in the second half of the year.
He said Nestlé's sugar confectionery brands were strong but did not have substantial market share. Coupled with the fact that the market was fragmented, there were unlikely to be competition issues.
Local sugar confectionery manufacturers have come under pressure in the past few years due to cheap imports from, among other countries, Brazil. The rising sugar price has also affected profitability.
Nick Dennis, the chief executive of Tiger Brands, said: "The acquisition would be an important addition to the company's branded confectionery business." The deal includes the purchase of the plant, equipment and trademarks.
Manghardt was in Pietermaritzburg earlier this week to discuss with staff the substantial drop in chocolate slab production over the past years and the loss of market share.
One option to address this was to relocate certain chocolate product lines to East London. This could mean the closure of the Pietermaritzburg factory, which employs 190 people. However, it was not clear how many people would be retrenched, Manghardt said.
Earlier this week Tiger Brands announced the acquisition of beverage brands Oros, Energade, Hall's, Monis and Roses through the purchase of Bromor Foods for R1.16 billion from Cadbury Schweppes.
Yesterday Tiger's share rose 2.02 percent to R176.90.
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