Bidvest buys Barbie and kettles

Bidvest have been very active over the last few weeks. Well I say last few weeks but these deals have obviously been discussed and evaluated in meeting rooms for months. Besides that point, the company has made two announcements indicating intentions to buy two separate companies.


The first announcement was a firm intention to purchase the remaining stake of listed company Amalgamated Appliance Holdings or AMAPS for R740 million. They already own 27.5% of the company and want to buy the rest. Amap's specialise in the sales and marketing of branded household goods like Hoover, Russell Hobbs, Tedelex, George Forman, Pineware, Sansui and TDK. They have the rights to sell many more of these brands.


The company has been doing well, from 2009 until the end of last year the company traded in a range around R2 a share, the Bidvest offer came in at R3.50. Revenue for the year ended June 2012 was up 20.5% compared to 2011 while operating profit was up 21.7% (to R84 million) compared to the previous reporting period. It is understandable, as households grow and more people enter the middle class these appliances will be bought. When the long awaited housing market turns in SA this company will be perfectly situated to boom. Here is the rational from the Amaps SENS.


"Bidvest believes the Transaction will enable AMAP to continue to service its customers more efficiently and after forming part of Bidvest the offering to AMAP's customers will be significantly enhanced. Conversely AMAP will benefit from being able to offer its products to the wider customer base of Bidvest."


The next announcement is to buy the entire issued share capital of Brandcorp Holdings from private equity group Ethos. Paul and Sasha reminded me that Brandcorp was once listed (before my time) and were taken off the market by Ethos. According to their website they are a similar company to Amaps, distributing niche industrial and consumer products. Consumer products include Polo, Disney, Barbie, Cellini, Hello Kitty and Hannah Montana. Industrial Brands include Hitachi, Wera and Pratley. For the same reasons that Amaps has a bright future, so does Brandcorp.


As shareholders of Bidvest, even though both these announcements are fairly insignificant in the bigger scheme of things for the company I take away two things. The first is that Brian Joffe still sees opportunities out there, especially geared towards the South African consumer. That is certainly a good sign because he has a knack for making good acquisitions, probably amongst the best deal related timing in the country.


The second is that both these companies have good potential synergies with each other and the Bidvest group. By gaining access to their massive distribution and client networks these companies can take it to the next level. Bidvest using their size and scale to dominate, that is what conglomerates do. We are happy to see the company doing what they do best.