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Stefan Rabe Bounty Brands

Bounty Brands Expands With Acquisition

 

South Africa's Bounty Brands, the consumer brands specialist controlled by SA investment house Coast2Coast, has pushed its annual revenue through the R1bn mark after confirming two more acquisitions on Tuesday.

The company, launched in February, has targeted annual turnover of R4bn-R5bn and operating profit of R1bn as prelisting goals. It is expected that Coast2Coast, which listed health brands conglomerate Ascendis in late 2013, will list Bounty Brands in 2017.

Bounty Brands CEO Stefan Rabe said the business had acquired direct-selling business Annique Health and Beauty (which sells rooibos-based skin and healthcare products) and Musgrave Agencies (which holds the Jeep apparel brand sold in SA and Australia), to add combined revenue of R440m. This will push our turnover through the R1bn mark, and give us earnings before interest and tax of around R220m.

The new business should slot in easily with Bounty Brands’ existing business hubs: Chappers Sports Direct (distributor of the Vans brand), direct-selling unit Table Charm and beauty products group Cosmetix.

Mr Rabe said the company’s potential deal pipeline was looking strong. We are well on our way to achieving a R5bn portfolio of brands and a listing within the next three years.

Bounty Brands would look mainly at chunky acquisition targets. We are looking at standalone deals with an earnings before interest and tax of at least R10m. For bolt-on acquisitions we would look at assets that can add at least R5m.

A small-cap analyst, who asked not to be named as he was unfamiliar with Bounty Brands, said that broadly speaking, the market tended to be wary when companies were patched together rapidly ahead of a JSE listing. There was initial scepticism around Ascendis when it listed, but the market seems to have warmed to their story.

It’s tough to gauge a longer-term outcome for Bounty Brands at this early stage. But they are up against some formidable (consumer brands) players.

Mr Rabe stressed that growth would not only be acquisitive as Bounty Brands was already experiencing organic growth from its existing businesses. Table Charm is expanding into Zambia and Mozambique, Cosmetix is launching Caribbean Tan in the US and Chappers has been successful in securing the Hurley agency for SA.

 

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