(Updates with no comment from Sysco in sixth paragraph.)
July 6 (Bloomberg) -- Bidvest Group Ltd., a South African holding company with interests from catering to cosmetics, received unsolicited offers for its Foodservice unit, its biggest business. The stock surged to at least a 21-year high.
Foodservice may fetch $4 billion, according to a person familiar with the transaction. Bidders may include Sysco Corp., the biggest North American distributor of food to restaurants; U.S. Food Services, owned by KKR & Co. and Clayton Dubilier & Rice Inc.; and Brakes Group, owned by Bain Capital LLC, said the person, declining to be identified as the matter is private. It’s unclear whether these companies have made approaches.
Bidvest’s board formed a subcommittee to consider options for the unit, which has “strong growth prospects,” the Johannesburg-based company said in a statement today. Foodservice contributed 58.4 billion rand ($8.6 billion) to the company’s 109.8 billion rand in sales last year.
The stock jumped 4.8 percent to 162 rand by the 5 p.m. close in Johannesburg, the highest since at least 1990. Bidvest has gained 27 percent over the past 12 months, giving the company a market value of 53 billion rand. Carol Dundas, a spokeswoman for Johannesburg-based Bidvest, declined to comment.
The Foodservice business may be worth 20 billion rand, Macquarie First South Securities Ltd. said in a note to clients. Peter Steyn, an analyst at Macquarie who co-wrote the note, has an “outperform” recommendation on Bidvest and values the entire company at 61 billion rand, or 192 rand a share.
A KKR spokesman in London declined to comment. Spokesmen for CD&R and Bain in the U.S. didn’t immediately return calls seeking comment. Charley Wilson, a spokesman for Sysco, declined to comment.
“The market was positively surprised by the news,” said Mark Hodgson, an analyst at Avior Research, in a telephone interview. The Cape Town-based research firm has had a “buy” rating on Bidvest since March 2010. The company’s management will probably get “a very good price.”
The company’s operations in Europe, Australia, Asia and Africa are attractive to buyers, Hodgson said. Bidvest could use the money from the potential sale of Foodservice to expand other businesses, said Hodgson.
KKR and Clayton Dubilier & Rice bought U.S. Foodservice from Dutch retailer Royal Ahold NV for $7.1 billion in 2007. Bain bought Brakes, which is Britain’s largest supplier of frozen foods to restaurants, from Clayton Dubilier & Rice in the same year.
--With reporting by Lauren Coleman-Lochner and Crisina Alesci in New York. Editors: Vernon Wessels, Elizabeth Wollman.
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