Bidcorp to dispose of Best Food Logistics business in the UK

INTERNATIONAL food services business Bid Corporation (Bidcorp) is to dispose of its Best Food Logistics business in the UK as part of its strategy to exit non-core assets. The group yesterday said that it would sell the logistics business to the Booker Group, a wholly owned subsidiary of Tesco Plc for an undisclosed amount.

Bidcorp said the transaction would take time to conclude, because it still needed to go through regulatory approval. “The transaction is subject to customary conditions precedent, including the approval from the Competition and Market Authority in the UK, which is expected to take several months,” the group said.

Best Foods operates in the QSR contract logistics market in the UK.

Bidcorp said that it expected no material financial impact on its consolidated net assets and profit for the year to end June 2020 as a result of the transaction. It said Best Foods had been recorded as an uncategorised transaction in terms of the Listings Requirements of the JSE.

Peter Takaendesa, a portfolio manager at Mergence Investment Managers, said Bidcorp had been in the market trying to sell its UK contract business since late 2017 and previous potential buyers failed to conclude the transaction later in 2018.

“The new potential buyer, Booker, appears to be in a strong position to conclude the transaction, unless blocked by competition authorities. Bidcorp has classified these operations as “discontinued operations” since December 2017 as they are considered non-core to its food services business and have been loss making for a while,” Takaendesa said.

He added that total discontinued operations reported losses of R732 million during the year to end June and were excluded from the normalised headline earnings numbers reported by the company. “Although the transaction is not a game-changer for Bidcorp, it is clearly the right thing to do as the company has not been able to turn the operations into profitability for a while,” he said.

Bidcorp reported a 9.8 percent increase in revenue to R129.3 billion while trading profit increased by 11.8 percent to R6.7bn, but trading profit was up by 7.1 percent on a constant currency basis. Its headline earnings per share increased by 12.5 percent to 1 443.6 cents a share and the group declared a dividend of 640c a share, which was up by 14.3 percent.

Bidcorp shares declined 0.31 percent on the JSE yesterday to close at R325.