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FBR - Famous Brands Limited - Voluntary announcement
FAMOUS BRANDS LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1969/004875/06)
JSE Share code: FBR ISIN code: ZAE000053328
("Famous Brands")
VOLUNTARY ANNOUNCEMENT
Famous Brands has acquired a 60% controlling stake in Java Lava Beverage
Manufacturers (Pty) Ltd, a privately owned state-of-the-art coffee roasting and
packaging business that supplies product to a range of existing food service and
retail clients. Java Lava`s range of packaged food service products includes
filter coffee, espresso beans, hot chocolate and milk powders, including instant
cappuccino products.
The purchase consideration is R7.3 million, which will be settled from cash
reserves. The effective date of the transaction is 1 July 2012.
Famous Brands` CEO, Kevin Hedderwick says, "This acquisition is in line with the
Group`s stated strategy to expand its manufacturing capability. The short term
intention is to overlay Famous Brands` business model on the existing Java Lava
operation and to extract obvious synergies whereby Java Lava will become a
focused manufacturing facility with all peripheral services being integrated
into Famous Brands."
He adds, "Moving forward, the goal is to create a specialist coffee company
which will be a source of coffee and related hot beverage product supply to the
Group`s franchised network and will also facilitate taking certain of Famous
Brands` franchised brands to the retail market."
Hedderwick explains, "Over time, the strategy is to shift Famous Brands`
existing coffee and related beverage business into the new joint venture. The
Group has a strong portfolio of franchised coffee brands which include Wimpy,
Mugg & Bean, tashas, Vovo Telo, Milky Lane and Juicy Lucy, and this acquisition
will afford both businesses a win-win outcome."
Established in 2007, Java Lava is currently owned by partners Brian Best, Steve
Giddings and Nohlene Bennett, and employs 18 staff and three regional agents.
The business is housed in a purpose-built facility in Sunderland Ridge,
Centurion, and roasts in excess of 20 tons of beans per month and produces eight
tons of hot chocolate monthly. Java Lava`s facility has Food Safety Assessments
(formerly SAFSIS), kosher and organic accreditations.
A further R7.0 million, also sourced from cash reserves, will be incurred to
equip and extend Java Lava`s existing capacity to take on the Group`s volumes.
It is anticipated that the new plant will be in a position to commence with
integration of certain parts of the Group`s business in July 2012. Once fully
integrated, this acquisition will position the company as one of largest coffee
roasting businesses in South Africa.
Hedderwick notes, "We will be retaining the skills and services of Brian Best
and Steve Giddings; Brian, a coffee business veteran with more than 15 years`
experience in the industry, will continue to manage the business on our behalf;
Steve will consult in terms of strategy and product formulation."
Best and Giddings comment, "Java Lava has always had great ambitions, and
partnering with an established leader in the food services sector will enable us
to expand our horizons. The new business will have significant advantage in an
industry that benefits strongly from high profile brands, quality and scale.
Java Lava offers entrepreneurial management, an accredited modern facility,
production capacity, and a lot of passion and experience. By focusing on the
synergies that exist between Famous Brands and Java Lava, the opportunity to be
a major player in the industry is significant."
Hedderwick concludes, "The compelling rationale for this transaction aligns with
our deliberate strategy to build manufacturing capability and to pursue
acquisitive growth not only at the front-end of our business, via our best-in-
class brands, but also at the back-end in terms of robustly examining
opportunities to expand the range of licensed products which we can manufacture
on behalf of our branded franchised network."
Johannesburg
26 June 2012
Sponsor
The Standard Bank of South Africa Limited
For further information:
Kevin Hedderwick Del-Maree English
Chief Executive Officer Investor Communications
Famous Brands Mobile: 083 395 8608
Telephone: 011 651 5812
Famous Brands` website:
www.famousbrands.co.za
Date: 26/06/2012 07:30:04 Supplied by www.sharenet.co.za
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