A newly-formed New Zealand food distributor with major expansion plans has bought two iconic brands as part of its drive to become a $50 million business within five years.
Cooks Food Group (CFG), an amalgamation of condiments business Cotterill & Rouse, general pantry goods manufacturer Murdoch's and chilled foods company Sahara, has bought the Diamond and DYC brands from Goodman Fielder in a deal worth $12 million.
The sale, to be finalised mid-year subject to funding, will increase annual revenues for CFG from $5m to $25m.
The $14m needed for the acquisition is being sourced through a combination of bank debt and the issue of ordinary shares and convertible preference shares on a two-for-one bundled basis to habitual and institutional investors.
CFG chairman Keith Jackson said the company planned to acquire other ''ambient'' (non-chilled) food businesses as well as create organic growth in its existing product lines.
CFG did a back door listing on the NZAX alternative exchange in September 2008 through Tasman Food Corporation. It involved Tasman's 450-odd shareholders getting a total 10 per cent of the company's shares.
The major shareholders in CFG are Jackson (58 per cent), Mainland Poultry chief executive Michael Guthrie (8 per cent), Diana Christian (8 per cent) and Tasman Capital Ltd (6 per cent). A move to the main board of the NZX will be considered following the two latest acquisitions.
As part of its strategy to focus on shelf staples, CFG is divesting its chilled foods division Sahara to Sanitarium at the end of the month.
The Diamond brand is New Zealand's number two seller for pasta, noodles and dry mix rice. DYC is the number one seller in the every day vinegar category.
Jackson said Goodman Fielder chose to divest the brands as they were not trans-Tasman and at $16m, represented a relatively small turnover.
But as major brands for CFG, he believed the company could provide more support to the product lines and increase advertising to help to boost revenue.
CFG chief executive Sarah Rainger said the economic climate had seen consumers favour lower cost products. This had benefited Diamond's staple lines.
- The Independent