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PRE-MERGER

In the years leading up to the merger, Sasko and Bokomo complemented rather than competed with each other. Sasko was a leader in the milling and baking fields, while Bokomo focussed on breakfast foods, broilers, eggs, and animal feeds. Sasko’s mills and bakeries were spread throughout South Africa, while Bokomo’s operations were mainly Cape based.

Sasko’s business

  • Milling and baking activities represented more than 80% of Sasko’s business, with the balance made up of confectionery, biscuits, pies, soy products, rice, industrial baking mixes and concentrates.
  • In 1977, Sasko partnered with Caledon Riviersonderend Co-op and SA Breweries to establish a malt factory in Caledon, called SA Maltsters.
  • Sasko also re-entered the maize milling industry in 1993, by pooling the maize milling capacities of 5 maize milling co-operatives into a company called Amaizco. Sasko obtained a 49% share in this company, and the management contract through this transaction.
  • During the mid-1990s Sasko also entered the soy food category by acquiring Lebnor Foods in the Northern Province.
  • Sasko had a wide wholesale distribution network, but limited exposure to supermarkets.

Bokomo’s business

  • Milling and baking activities represented only 40% of Bokomo’s business, with the remaining 60% made up of frozen food products, pastries, breakfast foods, broilers, eggs, pasta, packaging and animal feeds.
  • Bokomo owned quite a number of established household brands, with Weet-Bix as the most well-known.
  • Bokomo had a well-embedded distribution network in the rural areas of the Western and the Eastern Cape, and was also well-established in retail stores. 

The Sasko-Bokomo Central Co-operative deregistered

By 1987, the Sasko-Bokomo Central Co-operative, which had lasted 13 years, was deregistered. However, this period of collaboration between Sasko and Bokomo played an important role in paving the way towards a merger 10 years later.

Deregulation

By 1995, government’s regulation over the milling and baking industries ended, and the control boards, such as The Wheat Board, were dissolved. This marked the end of state control and co-operative ownership in the South African agricultural industries. Deregulation offered both Sasko and Bokomo the opportunity to become privately run profit driven businesses.

Sasko and Bokomo become private companies

By 1996, Bokomo and Sasko had converted from co-operatives to private companies within months of each other. The cross-holding of company shares would play a positive role in ensuring shareholder support for the imminent merger.

Amalgamation on the horizon

After becoming private companies, Sasko and Bokomo started strategically evaluating the long-term advantages of combining forces. Amalgamation proved to be the best option. It would provide maximum benefits for both companies with a national footprint of mills and bakeries. 

Deregulation of the milling and baking industries had resulted in over capacity and created pressure on the profitability of both companies.  To optimally utilise capacity and management skill in the deregulated environment, a merger seemed inevitable.

MERGER