AVI sells stake in Australian seafood joint venture
AVI subsidiary I&J sold its 40 percent stake in Simplot for R633 million.
South-Africa based consumer goods group AVI, owner of Five Roses, Green Cross and I&J, has sold its 40 percent interest in Australia-based seafood and snack manufacturer Simplot for R633 million.
Simplot makes and supplies seafood snacks in Australia and New Zealand.
The group cited as reasons its lack of managerial control in the venture, as well as a desire to exit businesses whose return on capital prospects did not meet its expectations. In its integrated report for the year to end-June 2019, AVI said I&J's joint ventures had yielded equity earnings of R42.2 million, down 25 percent from the prior period.
The joint venture with Simplot delivered reduced profits due to increased raw material input costs that were not fully recovered by price increases, as well as unfavourable foreign-exchange movements, the group said.
AVI also said the deal was in line with its strategy to exit businesses in which it had limited managerial control and restricted ability to steer strategic change.
After tax, the sale of the stake in Simplot transaction would result in capital gain of about R370 million, AVI said.
AVI said it would continue to supply seafood to Simplot as part of the companies’ existing supply agreement “and close working relationship with Simplot Australia”.