Woolworths has announced a landmark deal to acquire one of its longest-standing and largest suppliers, in2food, from a consortium of sellers including the founders and Old Mutual Private Equity, in a transaction valued on the back of the supplier’s massive revenue base.
The retail giant confirmed on Monday that it had entered into an agreement to purchase 100% of the issued shares of in2food Holdings, a move that solidifies a partnership that has lasted over three decades.
A strategic swallow
in2food, a powerhouse in the South African convenience food sector, generates revenue in excess of R5 billion per annum. The supplier operates eight world-class manufacturing facilities, producing over 3.2 million packs weekly across freshly prepared meals, fresh produce, long-life goods, and bakery items.
While Woolworths remains in2food’s largest customer, the supplier also services a portfolio of other local and international clients in the food service and wholesale channels—exposure that Woolworths views as a key growth opportunity.
Woolworths Group CEO Roy Bagattini said: “Woolworths and in2food share a more than three-decade history of partnership in creating products of outstanding quality and innovation to meet the evolving needs of our customers.
“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.”
Rationale: Resilience and retention
The acquisition is being framed as a strategic imperative to lock down supply chain resilience and secure Woolworths’ premium positioning in the market. According to the deal rationale, bringing in2food in-house will drive greater agility, improve speed-to-market, and enhance innovation and new product development.
Crucially, Woolworths has moved to reassure the market that the deal is not about consolidation for the sake of cutting costs, but rather about securing expertise. The senior leadership team of in2food will remain at the helm, running the business as a standalone operating unit within the Woolworths group. This is intended to preserve the “entrepreneurial culture” that has defined the supplier’s success over its 30-year relationship with the retailer.
The deal terms
The purchase consideration will be settled in cash, funded through a combination of Woolworths’ existing cash reserves and available financing facilities. The transaction is expected to be earnings-accretive for Woolworths, with further financial benefits anticipated as operational efficiencies are realized over time.
The deal remains subject to customary conditions, including approval from competition authorities. However, because the transaction falls below the threshold for categorization according to JSE Listings Requirements, Woolworths has made this announcement on a voluntary basis.
With this move, Woolworths effectively brings one of its most critical strategic partners fully into the fold, ensuring that the hands preparing its premium meals are permanently part of the family.
in2food has an experienced senior leadership team with deep, multi-disciplinary expertise across the food sector. The management team will continue to lead in2food as a standalone operating business within Woolworths ensuring continuity of operations while preserving the entrepreneurial culture that has underpinned its success.
“Woolworths and in2food have an extended track record of close collaboration, focused on delivering high-quality, innovative food products aligned with Woolworths Foods’ premium positioning,” said Richard Cooper, CEO of in2food.
“The Transaction further enhances Woolworths Foods’ ability to protect product quality, innovation and availability, which are core to its differentiated customer proposition. We look forward to further deepening our decades-long connection with Woolworths, and to continue to put innovation, value and quality at the centre of the Woolies Food journey.”
“This transaction brings to conclusion the more than three decade-long partnership with Old Mutual Private Equity and the other exiting shareholders.
“We would like to thank the outgoing shareholders for being very supportive partners, contributing meaningfully to the commercial rigour applied to key decisions along in2Food’s growth journey since 2015,” continued Cooper.
in2food is a South African based, market-leading supplier of high-quality convenience foods and one of Woolworths Foods’ most significant suppliers. in2food generates revenue in excess of R5 billion per annum through its diversified range of premium private label products across freshly prepared convenience food, fresh produce, and long-life categories as well as several ambient and bakery products. Woolworths Food is in2food’s largest customer with the balance of its customers comprising other local and international companies across the food service and wholesale channels.
Bagattini emphasised that the acquisition does not signal a change in Woolworths’ broader food sourcing model.
“Our unique relationship with our suppliers is what differentiates us, and is fundamental to delivering our premium food offering. This transaction further enhances the relationship we have with one of our most innovative suppliers, and will extend mutual benefits to our entire value chain and end-customers.”
