• Woolworths signs deal to acquire longtime supplier in2food Holdings
• Move aims to strengthen supply chain control and boost premium offering
• The deal is expected to lift earnings immediately, even before cost savings

South African retailer Woolworths announced plan to deepen its control over its food supply chaing. The company seeks to acquire longtime supplier in2food Holdings as competition intensifies in the premium grocery segment.

In a March 17 statement, Woolworths said it had signed an agreement to purchase 100% of in2food Holdings from its founders, Old Mutual Private Equity, and other shareholders. The deal, whose value was not disclosed, will be paid in cash and financed through a mix of existing cash reserves and available credit facilities.

The acquisition reflects Woolworths’ strategy to secure a critical part of its prepared foods supply chain, a segment where competition has been steadily increasing in South Africa.

“This acquisition represents a compelling opportunity to bring a key strategic capability closer to the Woolworths Foods business, strengthening one of the core points of differentiation in our premium food offering,” the group said, stressing that it also enables greater agility and improved efficiency across the supply chain, leading to faster time to market, while supporting innovation and new product development.

Woolworths added that the deal opens up new opportunities to grow non-competing revenue streams. The company expects the acquisition to boost earnings immediately, even before any cost savings or operational efficiencies are realized.

Following completion, in2food’s current management team will remain in place, continuing to run the business as a standalone operating unit within the Woolworths group.

in2food has supplied Woolworths Foods—the retailer’s food division—for about 30 years. The company generates annual revenue of more than 5 billion rand (around $300 million), driven by a wide range of private-label premium products, including ready meals, fresh foods, non-perishables, and baked goods.

Woolworths is in2food’s largest customer, with the rest of its client base made up of local and international players in the foodservice and wholesale sectors.

Walid Kéfi