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Famous Brands makes its fourth buy of the year

Cape Town – Famous Brands [JSE:FBR] on Monday announced the acquisition of its fourth business in a year, as the successful food company embarks on an acquisition drive headed by its former chief executive.  

The latest acquisition is a 49.9% stake in catering and events company By Word of Mouth. It did not divulge how much it paid for the stake.

This follows the acquisition this year of Britain's Gourmet Burger Kitchen (GBK) for R2.1bn in the UK, as well as the takeover of a South African tomato paste manufacturing plant and Lamberts Bay Foods.

READ: Why your Steers burger is making farming cool again

Famous Brands has seen 15 years of consecutive growth and this year reported a further 16% rise in profits for the year ended February 29.

READ: Steers owners score their own tomato paste factory at a bargain

Famous Brands said the latest deal is part of the company’s strategy to expand the business into the broader leisure and consumer product space.

Former CEO Kevin Hedderwick, who now heads up Famous Brands' M&A activity, said in a statement on Monday: "Having explored an extensive range of investment opportunities in the food service leisure and hospitality sector, we are delighted to announce our partnership with the owners of By Word of Mouth, Karen and Adrian Short.

"This transaction is the culmination of two years of intensive discussions and a process of gaining an understanding of and mutual respect for each other's businesses,” he said. “The Shorts are passionate about their company and determined to ensure that our partnership will be in the best long-term interests of By Word of Mouth; they will continue to manage the business, supported by Famous Brands."

High quality catering

By Word of Mouth was established in 1993 by Short, who identified a growing demand for high quality catering and professionally managed events.

By Word of Mouth offers a portfolio of services ranging from development of unique designer food and beverage menus to comprehensive event management including conceptualisation, equipment and décor hire, floral design, and staffing requirements.

The company is based in Linbro Park in Gauteng. It also manages a 400-seater venue, The Polo Room, at the Inanda Polo Club. The business employs a staff complement of over 200.

An event organised By Word of Mouth. (Photo: http://www.bywordofmouth.co.za/)

Famous Brands' plans for By Word of Mouth

"In the short term we will integrate By Word of Mouth's business into Famous Brands' infrastructure, where synergies permit and leverage their existing state-of-the- art kitchen facilities at Linbro Park," said Hedderwick.

Over the medium term, the intention is to expand the business's existing presence in the premium corporate market, a fast-growing segment of the commercial catering category. Over the longer term, the goal is also to establish a footprint for By Word of Mouth in Cape Town and Durban.

"A key aspect of this partnership is the opportunity to enter the home meal replacement retail space, through high-end stand-alone stores offering bespoke products created by Karen Short,” said Hedderwick .

“This retail business model will resemble the hugely successful COOK company in the UK, which produces ready-made meals using ingredients and techniques that ‘a good cook would use at home to ensure meals look and taste homemade'.

“I am particularly excited about the growth prospects of this component of the business because there is a strong and growing demand for an offering of this kind in the economically resilient upper-end of the South African market."

“Our partnership with Famous Brands is a great fit for numerous reasons: quality and attention to detail are paramount to both of our companies; we have a shared understanding of entrepreneurial, family businesses; and we are confident that Famous Brands will provide the support that we need to take our business to the next level, including establishing an offering for our clients across the country," said Short.

The transaction is subject to Competition Commission approval.

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