The SA seafood company I&J, owned by AVI [JSE: AVI], will sell its 40% interest in the Australian seafood and snack manufacturer Simplot for R633m.
After tax, the company will receive a capital boost of some R370m from the deal.
I&J will continue to supply seafood to Simplot, which produces food in Australia and New Zealand, but AVI said the deal reduces its "exposure to categories with low growth potential and whose future return on capital prospects do not meet AVI’s expectations".
It also said it had limited managerial control in the venture, and is restricted by how much it can bring significant strategic change to the business. I&J has been involved in Simplot since 1997.
AVI chair Gavin Tipper told the company’s annual general meeting on Thursday that the group's revenue for the first quarter to end-September increased by 2% over the same period in the prior year, with growth in food and beverage sales partially offset by pressure from the fashion businesses.
Apart from I&J, AVI also owns brands like Five Roses, Bakers Freshpak, Koffiehuis and Frisco, as well as the shoe company Spitz.
“Results for the remainder of the 2020 financial year remain dependent on sound consumer demand over the festive season and through the second semester," Tipper said.
Its consolidated earnings per share for the six months to end-December are expected to be between 35% and 45% higher.