Bidvest restructure

A pretty innocuous announcement from Bidvest yesterday that possibly has longer lasting implications for the future of the business is definitely worth dissecting. I for one, at a separate level, am so glad that the succession arguments have gone away. For one, Buffett and Munger have a collective 175 years between them, Brian Joffe is only 68. And whilst Berkshire is 50 years old, Bidvest is "only" 27 this year, having started with food businesses Chipkins and Sea World. Yet the team, led by Joffe has managed to build an empire that is now worth 115 billion Rand, something that is really sizeable, with annual revenues in excess of 200 billion Rand.

As long as the board want Brian Joffe, as long as he wants the job, we should expect him around for a few more years at least. You could argue that any of the lieutenants could do a good job, David Cleasby, the financial director has been there for nearly a decade and a half, he is in his early 50's. Bernard Berson has been at Bidvest for nearly 2 decades, he is just 50. There is also Anthony Dawe, his is nearly 50 and will have run the Bidvest Freight division for 10 years next year. Plenty of talent around.

That also includes Mpumi Madisa, a rising star at Bidvest, she is in her mid thirties, she has only been at the group for a couple of years. Another lifer at the business Lindsay Ralphs is possibly around 60 (he runs the South African business) too old, with all due respect. What do I know, the release suggests that Lindsay and Bernard can express their "entrepreneurial flair and take direct responsibility and accountability for the performance and growth of their companies" Perhaps Lindsay gives it horns day in and day out.

The announcement I am referring to is titled The Bidvest Group Limited formalises internal restructuring. It is simply splitting the business into three segments, Bidvest Industrial Holdings (BIH), which houses the current Bidvest South Africa and the Namibia interests. At the full year stage this business as a collective would have revenues of 91.3 billion Rand and trading profits of 5.546 billion Rand.

Then there is the more sizeable Bidvest Foodservice International Limited (BFI), which has all the foodservice businesses, local, Europe, UK and Asia Pacific, as well as recent South American forays. Total revenue at the full year stage for the Food Services business was 116.5 billion Rand, with trading profits of 3.986 billion Rand. Lastly, there is a business called Bidvest Capital Proprietary Limited (BC) which are the South African properties and all the companies that Bidvest does not have a majority stake in. Adcock, Comair, Cullinan and Mumbai Airport.

What is all this for? For the past few years the company has been reporting almost in this manner. Is this part of a bigger push and a chance to be more aggressive in defined areas? Some changes are just cosmetic, I suspect that this is the complete opposite, a re-energised Bidvest board, more focused strategies and more responsibilities for what has been one of the greatest entrepreneurial South African company stories of our time. We continue to accumulate Bidvest.