Coca-Cola Amatil is to sell its SPC fruit and vegetable processing business to the Shepparton Partners Collective for $40 million – making a profit of up to $15 million.
The new owner was “offering employment to all permanent staff”, Coca-Cola Amatil said in an announcement on Tuesday that caps a sale first mooted in August 2018.
Shepparton Partners Collective, a joint venture between Perma Funds Management and The Eights, said it would focus on reducing complexity at SPC and product innovation.
“We believe there is enormous opportunity to grow this unique 100-year-old brand further domestically and internationally,” Perma managing director Hussein Rifai said.
Coca-Cola Amatil bought SPC in 2005 for $700 million. But that value was written down to zero earlier in 2019 following challenges related to high manufacturing costs and competition from imports.
Coca-Cola Amatil said on Tuesday it had invested about $250 million in the company, including in technology, operational and energy efficiencies, and new equipment. A $100 million co-investment program from 2014 to 2018 modernised production and introduced new processing at the Shepparton site.
Coca-Cola Amatil said it expected a profit of $10 million to $15 million on completion of the sale, expected before the end of June.
“Amatil’s ability to frank dividends will be significantly impacted in the short to medium term” by the sale because of deferred tax assets, the company said in a statement to the ASX on Tuesday.
Coca-Cola Amatil group managing director Alison Watkins said there had been strong domestic and international interest in SPC because of the brand’s “iconic status” and the Victorian government’s $22 million contribution to support the fruit processor between 2014 and 2018.
“Shepparton Partners Collective recognises the value of SPC’s brands, the opportunities for innovation and category growth in Australia, and its export potential,” Ms Watkins said.
“This outcome is good news for SPC and good news for the Goulburn Valley.”
Ms Watkins said the buyer had the right combination of commercial experience, funding support and confidence in the future of SPC.
Shares in Coca-Cola Amatil were worth $9.37 before the start of trade on Tuesday, up about 7 per cent in the past six months.