(Recasts with acquisition plans, adds CEO, CFO comment)
JOHANNESBURG Feb 23 South Africa's Bid
Corporation (Bidcorp) can tap as much as $1.2 billion
for acquisitions, its finance chief said on Thursday, as the
firm reported a 20.6 percent rise in half-year profit.
Bidcorp, a food-service group that was spun out of Bidvest
last year, usually buys small firms it can bolt on to
its portfolio, which includes businesses in Europe, Britain and
"We would be comfortable with two times debt to EBITDA (core
earnings) on a conservative basis, so that's probably taking us
to 14 to 15 billion rand ($1.2 billion) or a billion pounds,"
CFO David Cleasby said in a conference call when asked how much
the firm can access to buy other firms.
Chief Executive Bernard Berson added that the most likely
targets would be family-owned firms or food-service groups held
by private equity firms.
"Food service is a highly fragmented market," said Berson.
Bidcorp operates on five continents, but does not have a
presence in North America, a market Berson does not rule out,
though he said growth among its U.S-listed peers had been muted.
"Canada might be more attractive for us," Berson said.
And any acquisition would be closely related to Bidcorp's
"We have no appetite to move out of food services," Berson
said, adding that the firm could do more retail business, but
was not about to open supermarkets.
Bidcorp has pulled back from low-margin, high-volume
logistics businesses globally, and started a rebranding
exercise, trading as "Bidfood" to reinforce its image as a
value-added food service group, he said.
Only in Britain, its largest market, does the firm still
have a significant logistics business, which according to Berson
accounts for 40 percent of sales, but zero percent of profit.
Bidcorp posted diluted headline earnings per share of 598.8
cents for the 6 months to end-December, compared with 496.4
cents a year earlier, sending its shares to a 3-month high.
Headline earnings per share is South Africa's main profit
measure and strips out certain one-off items.
Sales in Britain were down 13.8 percent as the weaker pound
weighed and Bidcorp exited some low-margin contracts.
Sales in the rest of Europe increased 12.5 percent and its
emerging market division grew revenue by 14.8 percent.
Bidcorp shares were up 9.6 percent at 253.80 rand by 1143
GMT, compared with a 0.4 percent rise in the JSE's All-share
(Reporting by TJ Strydom; Editing by Biju Dwarakanath/Jeremy