Bidcorp to sell UK transport business
International food services business finalises agreement to sell Best Foods to Tesco’s Booker Group
Bidcorp has sold its noncore UK logistics for an undisclosed amount as part of the international food services group’s exit from low-margin, high-volume logistics businesses.
The disposal of Best Foods Logistics, which operates in the quick-service restaurant contract logistics market in the UK, has been on the cards since December 2017.
Bidcorp, which separated from Bidvest and listed on the JSE in May 2016, said on Wednesday it would sell Best Foods to Booker Group, a wholly-owned subsidiary of Tesco, the British multinational groceries and general merchandise retailer.
Booker is a UK-based food wholesale company offering branded and private label goods to more than 400,000 customers including independent convenience stores, grocers, pubs and restaurants.
The sale comes despite Bidcorp expecting “much-improved” financial performance from Best Foods in the 2020 financial year after the company won back the contract to deliver KFC in the UK. Best Foods had previously lost the distribution deal to DHL.
Tesco said on Wednesday that the sale would add £1.1bn in food service sales to Booker’s operation.
Bidcorp said the transaction was subject to conditions including the approval from the Competition and Markets Authority in the UK “which is expected to take months”.
The company said the disposal would have no affect on Bidcorp’s net assets and profits for the year to end-June 2020. The asset was classified as a discontinued operation in the group’s 2019 financial results, which were released in August 2019.
Byron Lotter of Vestact Asset Management said the sale was in line with Bidcorp’s preference for high-margin businesses.
“Best Foods is a low-margin, high volume business. It is also sensitive to the oil price,” Lotter said.
Ron Klipin of Cratos Wealth said the sale of the quick service restaurant contract logistics business fitted into Bidcorp’s strategic plans to exit that market.
“Bidcorp’s core business focus in the global food services has proven to be a highly successful operation. There is no reason to diversify into related areas,” Klipin said.