COMPANY COMMENT
SA companies have burnt their fingers by buying UK businesses
Famous Brands should perhaps not have bought the poorly performing Gourmet Burger Kitchen chain in the first place because risk is everywhere
How things have changed. When South African companies bought UK assets a few years ago, it was generally seen as a way to reduce their exposure to a “risky” local market. Over there, people earned hard currency and had a reliable power supply. Here, they had to put up with a pernicious government and a difficult economy. Nowadays the spectre of doom brought by the UK’s calamitous exit from the EU has all but destroyed the notion that moving there somehow derisked the SA operation. In fact, the record shows that in buying British businesses, local companies actually made themselves more vulnerable. Look at Famous Brands. Brexit received a lot of the blame for the poor performance of its Gourmet Burger Kitchen chain. But maybe Famous Brands shouldn't have bought the chain in the first place. South African executives tend to get a little starry-eyed when looking at opportunities in the UK. They see earnings in pounds being converted into rand. They see a business and social culture the...
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