Bidvest’s spun-off unit Bidcorp lists on JSE, valued at R91.6bn

By Liezel Hill

(Bloomberg) — Bidvest Group Ltd. and its newly spun off foodservices unit Bid Corp Ltd. increased their combined market valuations after the latter started trading in Johannesburg on Monday, indicating investors see more value in separating the businesses.

Brian Joffe- Bidvest
Brian Joffe

Bid Corp shares started trading at 270 rand, valuing the company at 91.6 billion rand ($5.8 billion). Bidvest, which will now focus on non-food services such as car rental, freight and office management, is now valued at 38.6 billion rand, bringing the combined market capitalization to about 130 billion rand, compared with about 124 billion rand on Friday.

The listing on the Johannesburg Stock Exchange “positions us superbly for our next phase of organic and acquisitive growth,” Bid Corp Chief Executive Officer Bernard Berson said in an e-mailed statement. “The focus we now have as a standalone company will strengthen management’s determination to continue generating and enhancing sustainable, long-term returns for all stakeholders.”

Read also: Founder, CEO of Bidvest Brian Joffe to step down

Foodservice unit accounted for 60 percent of Bidvest’s sales in the six months through December. The unit includes businesses from catering to food-processing, and operates in more than 20 countries across Europe, Australasia, the Middle East and Southern Africa, according to the company’s website.

Bidcorp media release

Johannesburg, May 30 2016: Bid Corporation Limited (Bidcorp) has today listed on the JSE Limited.  Bidcorp ‘houses’ the international and local foodservice operations and assets unbundled from Bidvest Group Limited.

Bidcorp CEO, Bernard Berson, commented, “Today’s listing is an exceptionally exciting event for all of us.  It represents the next step in our journey to becoming a global leader in the food service industry, and positions us superbly for our next phase of organic and acquisitive growth.  The focus we now have as a standalone company will strengthen management’s determination to continue generating and enhancing sustainable, long-term returns for all stakeholders as we continue to ensure the delivery of improved efficiencies and robust cash flows”.

The listing of Bidcorp will enable its management to focus on realising the potential that exists in the current foodservice operations, as well as creating an improved platform from which to pursue both organic and acquisitive growth.  Shareholders will benefit from greater transparency with regard to the nature of the foodservices activities, the geographies in which they operate and, subsequently, their potential values.

Read also: Bidvest 1H profits up 13% – Bouyed by Food Services, Rand depreciation

Numerous benefits are derived from this listing, including the improved management focus, which will not only assist in identifying acquisition opportunities, both locally and abroad, but also enable management to mitigate and manage the specific risks and challenges faced in Bidcorp’s diverse product and geographic areas of operation.   This will allow management to dramatically increase their scope for entrepreneurial flair.

CEO of the JSE, Nicky Newton-King commented, “The addition of Bidcorp to the JSE is a significant development for our market and represents great potential for the growth of the Food Retailers and Wholesaler sector. They are coming to the market as part of one of the biggest industries on the JSE. The R1.5 trillion strong Consumer Services industry has seen healthy growth over the past few years. We wish Bidcorp all the best at the start of this chapter of their growth path”.

Mr Berson concluded, “While Bidcorp has grown into a substantial international business, we remain true to our South African heritage and we see the JSE listing as an exciting platform to share the next chapters in our exciting story”.