Tiger Brands to sell processed meat division traced to deadly outbreak

Tiger Brands is to sell its processed meats division, which includes the business implicated in the Listeria outbreak in South Africa in 2017 and 2018.

The transaction includes two separate deals — Molare Proprietary Ltd. will buy the abattoir business at Olifantsfontein and Silver Blade Abattoir Proprietary Ltd., a wholly-owned subsidiary of Country Bird Holdings, will acquire the meat processing businesses at Germiston, Polokwane and Pretoria.

Molare, a major supplier of pigs to the abattoir business, will pay 117 million Rand ($6.7 million) for this deal while Silver Blade has agreed a 311 million Rand ($17.8 million) purchase for the meat processing businesses and all the inventories with the transaction expected to be effective beginning in November this year.

Listeria outbreak
The value added meat products (VAMP) business units operate from an abattoir and three meat processing facilities in South Africa, where they produce and package products such as polony, viennas, bacon and sausages.

The listeriosis outbreak began in 2017 and was declared over in September 2018 with 1,065 confirmed cases and 218 deaths and is now the subject of a class action law suit. It was traced in March 2018 to a ready-to-eat processed meat product called polony made at the plant in Polokwane and run by Enterprise Foods, which is owned by Tiger Brands.

Country Bird operates the Supreme Chicken brand, which provides frozen chickens for households, Nutri Feeds brand, which is active in animal nutrition, Opti Agri brand supplying day old chicks into the poultry market, Country Bird Logistics brand which provides a wholesale branch to Country Bird´s operations and poultry related operations in eight other African countries.

Noel Doyle, CEO of Tiger Brands, said almost 1,000 jobs will be safeguarded with the sale of the business.

“This is no small matter, particularly given the escalating unemployment in South Africa in the context of the severely constrained environment and poor economic outlook. We felt that it was our duty to our employees, customers and consumers to ensure that the processed meats category – an important source of protein to many South Africans – properly recovered after the listeriosis outbreak,” he said.

No impact on class action
Tiger Brands conducted a review in 2017 looking at selling its VAMP business. However, the outbreak and closure of manufacturing facilities delayed the evaluation. When the business re-opened at the beginning of the 2019 financial year, a review was started.

In late 2019, a Tiger Brands stock market statement said the business was “not an ideal fit within its portfolio” and that consideration should be given to exiting the category with several offers received.

Tiger Brands said the transactions do not impact the class action law suit or affect its commitment to resolve the ongoing legal process. Any potential liability under the class action will not transfer to the new owners.

“We cannot overstate the significant and far reaching consequences of the listeriosis crisis, particularly on the victims of the outbreak and their families. Tiger Brands remains committed to following due process to ensure that an equitable resolution of the matter is reached in the shortest possible time,” said Doyle.

Tiger Brands representatives said the transactions do not impact the class action or affect its commitment to resolve the ongoing legal process.

In June, the Johannesburg Division of the Gauteng High Court ruled in favor of Tiger Brands telling the National Institute for Communicable Diseases (NICD), two accredited national laboratories and some meat producers to provide epidemiological information for the class action lawsuit.

Tiger Brands said the ruling would help provide access to information relevant to the proceedings and enable parties on both sides to move matters forward. The firm issued subpoenas in May 2019 to NICD and other parties requesting the information and later filed an application to the High Court.

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