Page 5 - Food&Drink Business magazine October 2022

NEWS
Coles’ $300m Express sale
COLES Group looks set to sell its fuel and convenience retailing business to Viva Energy for $300 million and related leases, saying the leases represented an $816 million liability on its FY22 balance sheet.
Coles CEO Steve Cain said the move would allow the retailer to focus on its grocery and liquor businesses and sustainability targets.
The two companies have owned and operated 710 Coles Express branded sites in an alliance that was due to end in 2029. The sale will transfer Coles’ share to Viva, and is expected to be completed by 2H FY23, subject to Australian Competition and Consumer Commission and Foreign Investment Review Board approvals.
The deal will see land occupied by Coles Express at the 664 sites where it is a subtenant of Viva, revert to the energy company, and Viva will acquire the remaining 46.
The 6000 Coles Express employees will be offered roles with the Viva Energy Retail business “on terms and conditions no less favourable (on an overall basis)”.
Coles has agreed to provide ongoing support
and services to Viva Energy for up to two years as it builds its internal capabilities.
Site branding will change over the next
3.5 years, with the majority updated within the next two. Existing loyalty programs including FlyBuys and discount dockets will continue.
In FY22, the Coles Express business reported sales of $1,132 million, with earnings before interest and tax of $42 million. Coles Express accounted for $816 million of the lease liabilities on Coles’ FY22 balance sheet.
The company expects to record a “small gain” on the sale while the earnings impact is not expected to be material. ✷
Freezer aisle heats up with Patties, Vesco Foods sale
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TWO of Australia’s top 100 food and beverage companies, Patties Foods and Vesco Foods, look set to be acquired by APAC private equity powerhouse PAG.
Terms of the deal have not been disclosed, but the companies’ combined revenue is more than $600 million. PAG already has a large local footprint in Australia and New Zealand with Craveable Brands (Red Rooster, Oporto and Chicken Treat) and chicken processor Cordina Group.
PAG Private Equity ANZ managing director Sid Khotkar said, “Over the past few years, PAG has had the privilege of working with several leading local companies, and we are looking forward to putting that expertise to work in support of Patties and Vesco.”
Patties is the trading name for the foreign-owned private company Australasian Foods Holdco, which is owned by Pacific Equity Partners and
manufactures chilled and frozen food products. Brands include Four ’n Twenty, Patties, Herbert Adams, Nanna’s, and New Zealand brand Leader.
Meanwhile, Catalyst Investment Managers is the parent company for locally owned Heat to Eat Holdings, which operates as Vesco Foods.
Vesco was established in the 1970s, rebranding in 2009 to Vesco Foods. It specialises in manufacturing ready meals, with brands Lean Cuisine, Super Nature, On the Menu, Annabel Karmel, and Jarraballi.
While PAG has a substantial business in Australia, the reality of its foreign ownership means the Foreign Investment Review Board may decide to take a closer look at the deal.
Similarly, The Australian Competition and Consumer Commission (ACCC) may investigate, as the acquisition will see PAG own a significant bite of the frozen aisle, from meat pies and plant-based burgers to desserts.
Patties CEO Paul Hitchcock said the acquisition is recognition of the company’s reputation as a respected local food manufacturer.
“It presents a significant opportunity for Patties Foods, unlocking further investment into market leading innovation, well-known brands and manufacturing capabilities,” Hitchcocksaid. ✷
See industry export David Thomas’s comment on the sale on page 10.
THE BIG FREEZER SALE
Singaporean private equity business PAG has bought two of Australia’s major frozen food companies, Patties and Vesco Foods.
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www.foodanddrinkbusiness.com.au | October 2022 | Food&Drink business | 5