Libstar attracts acquisition interest amid strategic review

SOUTH AFRICA – Libstar, a dairy manufacturer, has drawn interest from potential acquirers amid an internal review of the business.

In a statement, the owner of dairy brand Lancewood said it has received non-binding, indicative expressions of interest from unnamed parties.

The company stated that the submissions covered the potential acquisition of all Libstar securities currently outstanding.

The company said, “The board has resolved to evaluate the interest further, but it cautioned that talks with the “potential investors” are at an early stage. There can be no certainty that these engagements will ultimately result in a binding offer.”

In March, Libstar revealed it was evaluating potential strategies through which to deliver meaningful value unlock for stakeholders.

As part of the review Libstar announced in March, the company outlined plans to implement a shared-services framework for its ambient products business, with a focus on wet condiments.

Additionally, Libstar said it would be looking to make changes to its retail, snacks, and spreads divisions. The retail division, Rialto, along with Ambassador Foods (snacks) and Cape Coastal Honey (spreads), was to be combined.

Libstar’s disclosure came alongside the publication of its financial results for the first half of the year. During this period, the company reported a revenue of R5.95bn (US$343.2million), a 6.6% increase compared to the same period the previous year.

Operating profit rose by 14.6%, reaching R230.8m. Total profit for the period increased by 8.7% to R90.7m.

The dairy sub-category, excluding excess raw milk sales, saw revenue increase by 3.1%, driven by volume growth in core categories of natural cheese and yoghurt, offset by lower volumes of fresh milk and whey powder, resulting in an overall reduction in sales volumes.

Whilst Dairy sub-category margins improved overall, the sub-category under-recovered production costs as production was lowered in favour of selling down existing inventory.

This cost under-recovery, along with a revaluation of cheese inventory resulting from milk pricing, adversely impacted gross profit margins.

With stock and production levels now normalised and limited further milk price movement anticipated for the remainder of the year, Dairy margins are expected to improve further in H2.

Outlook

The company stated, “In a global environment shaped by ongoing trade tensions and geopolitical uncertainty, alongside a persistently constrained local consumer market, Libstar remains steadfast in its focus on resilience, operational simplification, and long-term, sustainable growth.”

The group aims to drive operational efficiencies across its manufacturing footprint to counter rising input and logistics costs, while also accelerating innovation and developing value-added products that meet evolving consumer needs and reinforce price-value relevance.

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