AGRICULTURE: Agricultural Giants Structure Innovative Retail Merger
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AFGRI and Senwes have announced their entry into a transaction in which the two agricultural companies will merge together its retail agricultural businesses as well as Partrite, the AFGRI owned wholesale subsidiary, to form a new joint venture, in which both parties will own 50%. The joint venture will exclude mechanisation in the form of the John Deere dealerships.
Chris Venter, CEO of AFGRI explained the rationale of the transaction as, The amalgamation of our retail network with that of Senwes, together with the purchasing power of Partrite, creates a far more efficient structure for both AFGRI and Senwes in this retail space. Senwes, like AFGRI, has a proven track record in managing retail agricultural stores and are especially strong in direct sales, which may greatly enhance our current network.
It will give the new retail network a greater geographic area of operation whilst simultaneously reducing specific commodity concentration risk. A further benefit is that greater economies of scale can benefit clients as optimal price, logistics and product offering can be negotiated with mutual essential key suppliers.
We are very excited about this potential transaction, not only due to the many benefits to Senwes but also that this transaction provides diversification and the entry into the wholesale arena, not previously explored by Senwes, said Francois Strydom, CEO of Senwes. Both Senwes and AFGRI can benefit in combining strengths in this highly competitive retail market, whilst still ensuring that their respective clients bases enjoy the benefits of a sustainable rural and retail market player.
Brand identity under the respective trademarks such as Town and Country, Farm City and Senwes Village will be maintained in the respective area of operations through the various provinces in which the various mentioned brands operate. It is envisaged that the focused operation will ensure system efficiency and improved stock management levels.
Although the transaction is still subject to various pre-conditions such as the approval of the AFGRI and Senwes boards of directors as well as the Competition Tribunal, the two companies are positive regarding the outcomes and look forward to a prosperous partnership.
The remainder of the businesses of AFGRI and Senwes are excluded from the merger.
Business News Sector Tags: Agriculture|