Cadbury offloads South African drinks business
Africa's beverage firm Bromor, as the firm shifts global focus from
fizzy drinks to gum production to address changing consumer trends.
The sale will see Bromor Foods go to Tiger Foods for $191m (€157m). The deal originally planned for first half of the year now awaits South African competition authority consent, expected in the second half of 2006.
Bromor employs 900 people and sells branded concentrates and other soft drinks in the South African market. Company sales hit $113m in 2004 with an operating profit of $10.5m.
The decision to sell the drinks business follows the sale of Cadbury's European beverages unit, and represents a change in direction for the global food group.
The move comes as fizzy drinks firm Britvic announced a $237m loss in share value earlier this month, acknowledging the market for sugary drinks is in decline as healthy eating trends gain momentum.
Cadbury now intends to go head to head against Wrigley for a bigger share of the thriving chewing gum market.
The firm recently bought South Africa's largest chewing gum business from Botswana-based Dan Products for $58m, in a strategic move to get a competitive advantage over rival Wrigley.
Management admitted the acquisition will not only reinforce the company's presence in the South African market but also act as a platform for expansion in other markets in the southern region of the continent.
The newly-acquired manufacturer produces gum under the Stimorol and Dirol brands. Cadbury said the business achieved sales of about $15.7m in 2005, and had an operating profit of $5.2m.
Earlier this year the EU cleared the $2.1bn takeover of Cadbury Schweppes' European drinks business by a private equity group, which included rights to key brands such as Orangina and Oasis.
The company said the sale would allow it to repay debt and further focus on its global confectionery and drinks businesses in other parts of the world.
