South Africa's Bidvest ditches food service listing, shares fall

JOHANNESBURG (Reuters) - South Africa's Bidvest Group on Monday jettisoned plans for a potential listing of its food service arm, the second time it has balked at spinning off the unit and disappointing investors who had bet on a hefty pay-out from the move. Bidvest, a sprawling company involved in businesses from shipping to mop sales, has long acknowledged the need to separate its food business from the rest of group, saying the unit's true value has not been reflected in its share price. In September it said it had hired Barclays and Investec to evaluate a potential listing of the unit, saying it would be increasingly difficult to fund an overseas acquisition for the business with a South African balance sheet. However, on Monday Bidvest said it was no longer considering the listing, reminiscent of 2011 when it rejected buy-out bids for the unit on the grounds they would not have benefitted shareholders. "The board has concluded that the potential listing will not, in current circumstances, be in shareholders' best interest," Bidvest said in a regulatory statement, adding its strategic review had identified other opportunities that will be pursued, without elaborating. Bidvest had been looking to list the food service business in London, where a number of flotations have been pulled recently due to sliding equity markets and growing caution among investors about prospects for the global economy. The unit, Bidvest's biggest division and one that contributes more than half of the company's 183.6 billion rand ($17 billion) in sales, supplies pubs, restaurants and hotels in Europe, South America and Asia. Shares of the company fell 3.4 percent to 293 rand, making it the biggest decliner on Johannesburg's benchmark Top-40 index. "The market is obviously disappointed because this is the second time this has happened," said Reuben Beelders, a portfolio manager at Gryphon Asset Management in Cape Town, which owns Bidvest shares. However, Beelders pointed to the long-term ability of Bidvest founder and chief executive Brian Joffe to create value for shareholders. "Operationally, he can extract value where others don't. One can't argue with the value he has created over time." Joffe is known as one of South Africa's savviest dealmakers and has a long history of buying underperforming companies and turning them around by focusing on cash flow and streamlining operations. (1 US dollar = 11.0650 South African rand)