Long4Life has concluded a Share Purchase Agreement to acquire 100 per cent of Inhle Beverages (Inhle), subject to the completion of a due diligence and obtaining certain regulatory, including Competition Commission, approvals.
Inhle is a well-established contract packaging business located in Heidelberg, Gauteng, and specialises in the canning and bottling of carbonated soft drinks, energy drinks and natural mineral water using cans and polyethylene terephthalate (PET).
Inhle was established in 2003 with one production line. It is today the second largest beverage co-packaging business in South Africa with seven production lines, and with considerable scope for expansion. It employs around 300 staff and undertakes co-packaging on behalf of an established client base, which have all been growing respective volumes at a steady pace over the last few years.
Inhle is a family-owned business and the existing shareholders, the Botha family, and its management team will continue to be employed in the business.
The maximum purchase consideration is R360 million and will be settled by way of a combination of cash and Long4Life shares, the latter based on Long4Life’s traded volume weighted average price (VWAP) in the five days prior to the closing date.
Long4Life chief executive, Brian Joffe, comments, ‘This acquisition fulfils the broad definition of our investment criteria in the leisure space. It presents a strategic opportunity from which we can build a beverage business of scale, through both organic growth and bolt-on acquisitions. Immediate access to the largest market in the country as well as its proximity to surrounding territories positions Inhle extremely well from an expansionary point of view.’
Inhle recently secured a liquor licence (for packaging purposes), which represents another industry opportunity for Long4Life to expand its interests in this sector. The co-packaging on behalf of Inhle’s clients will initially be focused on canned, already-mixed beverage products, which has seen strong growth over the last few years.
Inhle director, Chris Botha adds, ‘The overriding benefit of this acquisition is that it positions Inhle for its next exciting growth chapter. As a family-owned business we have certain constraints, but partnering with Long4Life and being able to access its funding capability, as well as the vast entrepreneurial knowledge and experience of its team, allows us to better position ourselves for the future and, therefore, take advantage of the significant opportunity that exists in the rapidly growing beverage industry in South Africa.’
The concept of co-packaging on behalf of beverage manufacturers is a growing international trend, which ultimately reduces risk for the packaging supplier, being Inhle in this instance.
Long4Life’s chief operating officer Kevin Hedderwick concludes, ‘We share a common growth objective with Inhle’s existing shareholders and management, and we recognise the value of entering a market with a partner that is already well-known and highly regarded in its industry. We are excited about the opportunities that this partnership will bring as part of a larger, ambitious entity.’