The Competition
Tribunal announced its conditional approval of the merger between the
Humansdorp operation and the Howick firm recently.

The conditions are
applicable to the fulfilment of a series of share purchase tranches which will
make up the staggered acquisition. Employees’ jobs are also protected as part
of the merger conditions.

Both Woodlands,
controlled by prolific Eastern Cape company, Gutsche Family Investments (GFI),
and Fairfield, controlled by majority share owner, Kevin Lang, supply milk and
other dairy products nationally and enjoy supply contracts with some of the
country’s leading retail chains.

For Woodlands, the
deal will allow it to ramp up its value-added products business through
Fairfield’s facilities, while delivering on its strategic objectives which
include expanding its basket of products.

Woodlands chief
executive, Lex Gutsche, said the deal arose from efforts to expand the
company’s operations.

“I was looking for
an opportunity to expand our business with particular interest in growing our
value-added products portfolio. “I engaged an agent to explore two prospective
companies and it became apparent that Fairfield Dairy was on the market,”
Gutsche said.

“Kevin Lang, the
majority owner, indicated his willingness to sell to us and we structured a
deal whereby we will acquire 100% of the shares of his company over a five-year
period.

“This enables us to
learn about his business from him over a period. The first tranche will buy us
40% of the company.

“Within two years
thereafter we must exercise our right to acquire a majority share in
Fairfield.”

Gutsche said he was
not at liberty to disclose the value of the deal.

Acknowledging that
Woodlands shared some key customers with Fairfield, he said the two businesses
were a great fit in that Fairfield would complement Woodlands’ range of
products and so would enhance the company’s product range and customer
offering.

Gutsche framed the
deal as a matter of quality over quantity.

“Fairfield Dairy’s
product portfolio is a superb one with predominantly value-added products, as
opposed to our range which has more of a commodity nature with some value-added
products.”

Questioned about
the effect the deal would have on Woodlands’ national footprint, Gutsche said
he did not foresee any significant difference from a distribution perspective.

“Woodlands Dairy
already has national cover as does Fairfield as they distribute into the DCs
(distribution centres) of national retail structures, so I don’t see a big
difference ensuing regarding distribution,” he said.

“A major aspect for
us will be to be able to contract-pack First Choice [Woodlands’ brand] value-
added products at the Fairfield facility that we currently don’t manufacture in
Humansdorp.

“Obviously our
penetration into the KwaZulu-Natal region will be enhanced through this
acquisition.”

Gutsche said each
business would continue to run independently and under its own name.

“There will be no
changes to management structures in the foreseeable future.

“We will have two
positions on the board initially which will enable us to learn the business
first-hand and also influence strategic direction,” he said.

“We are extremely
excited about the deal, which makes absolute sense to our strategic plans to be
a more complete dairy company, supplying a full range of dairy products to the
market.”

Source: Food Stuff SA