Bowler, which has been under cautionary since March, announced that Quality Beverages would be merged into another soft-drink bottler‚ Shoreline Sales and Distribution‚ in a share-funded deal worth R274m.
Bowler‚ which has battled with profitability in Quality Beverages since expanding into the Gauteng market‚ will retain a 46% stake in the enlarged soft-drinks entity to be called SoftBev.
Bowler's Chief Executivew Friedel Sass said Shoreline‚ which markets soft drinks under the Coo-ee brand‚ operated a similar business to Quality Beverages from an operational and standards point of view. The key difference is that Shoreline has KwaZulu-Natal as its primary market‚ with Quality Beverages operating mainly in the Western Cape and more recently in Gauteng.
Opportune Investments' Chris Logan‚ a shareholder in Bowler‚ said the proposed transaction sounded promising. "It should result in marked synergies on the soft-drink side and hopefully allow Bowler to focus on its core plastics (packaging) division‚ which has suffered recently."
Sass said the synergies between the soft-drink companies included procurement‚ production‚ marketing‚ distribution and management. "If the proposed transaction is successfully concluded‚ the benefits to all stakeholders (including consumers) should become apparent within twelve months."
But Bowler's core plastics packaging division‚ Bowler Plastics‚ appears to sacrifice some short-term profit in the deal. Bowler Plastics will be responsible for polyethylene terephthalate (PET) bottle blowing at Quality Beverages's Epping premises until the merger with Shoreline is completed. After that Bowler will not supply blown bottles to Quality Beverages but rather the same quantity of preforms.
Sass said this integration of bottle blowing into a filling operation was consistent with best manufacturing practice and would see improve efficiencies to reduce the cost of production for Quality Beverages in the Western Cape.
He admitted‚ though‚ that the loss of the PET bottle-blowing profits would hit Bowler's operating profits.
Source: BDPro via I-Net Bridge
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