Miles Dally CE of RCL, previously called Rainbow Chicken
AVI and Pioneer Foods Group in terms of market capitalisation. With its appetite for new opportunities not yet sated, RCL is about to undertake its second sizeable rights offer in less than a year — this time petitioning its minority shareholders to pitch in for R2,5bn.
The question is whether RCL would look at chasing down large prey (perhaps Brait’s Premier Foods) or prefer to nibble at selected operational assets that can be easily mixed into the existing food holdings. Allied to the bulking up of the Remgro food basket in RCL is the group’s influential minority stake in Unilever.
Durand says Remgro is a very happy investor in Unilever.
Some market watchers have pondered whether RCL would attempt to buy back the Robertson’s spice brands from Unilever. These highly profitable spice operations once belonged to Rembrandt subsidiary HLH (which initially housed Rainbow Chicken), and Miles Dally, the highly rated CEO of RCL Foods, was formerly the boss of Robertson’s. For the time being, though, it seems as if Remgro won’t have any hitches by having both RCL and Unilever in its food basket.
Perhaps more intriguing is what role Remgro will play as the biggest investor in liquor group Distell. Remgro has in recent years fortified its position with 33,4% after snapping up shares on the open market and also acquiring a significant minority interest in Capevin (a holding company with an influential stake in Distell as its only asset).
The other major Distell shareholder is beer giant SABMiller with a 28,9% stake. SABMiller holds no board influence at Distell (even though former SABMiller executive Richard Rushton was recently headhunted to serve as CEO of Distell), and the relative value of the stake in Distell is small for the global brewer.
There can be no doubt Remgro is coveting SABMiller’s stake in Distell. But with Distell making huge gains in its cider business (at the expense of beer in SA), SABMiller might like to retain some equity in the venture.
There are market watchers who feel Distell (which has recently acquired influence in global cognac and whiskey markets) would only be able to deliver on its global ambitions if Remgro was unhindered as the directional shareholder.
But if Remgro can make a strategic ally of SABMiller, then marketing synergies could be useful in extending the highly profitable cider business into international markets and in strengthening distribution systems in wine exports. ing driven through logistics and shipping giant Grindrod, which recently acquired 20% stakes in top agri-services businesses Senwes and NWK. The two are currently under cautionary, and perhaps Grindrod — with Remgro at its side — could drive further consolidation in SA’s fragmented agri-business sector.
Remgro has also undertaken significant infrastructure partnerships with a 45% stake in the Kagiso Infrastructure Empowerment Fund (KIEF) and the Pembani Remgro Infrastructure Fund (PRIF).
KIEF invests in roads, airports, power and telecommunication installations, railway systems, ports, water and social infrastructure, while 50%-held PRIF focuses on private sector investment in infrastructure across Africa.
It appears almost inevitable that Grindrod and the fund investments will overlap.
Arguably the most exciting segment is the FLH cluster, which comprises food conglomerate RCL Foods (formerly Rainbow Chicken), Distell and a 25% stake in household brands giant Unilever.
Aside from its traditional holdings in Rainbow Chicken and Vector Logistics, RCL has now been bulked up with Foodcorp’s brands (Nola mayonnaise, Ouma rusks, and Yum peanut butter, among others) and more recently the “swap-in” of TSB Sugar (of which Remgro already held 100%).
With TSB on board, RCL will hold an equity value of about R15bn, putting the company just behind JSE food sector stal-