In morning trade the Coca-Cola Amatil Ltd (ASX: CCL) share price has pushed higher following the release of an announcement relating to its SPC business.
At the time of writing the food and beverage company's shares are up almost 2% to $9.54.
What was announced?
This morning Coca-Cola Amatil announced that its SPC fruit and vegetable processing business would be sold to Shepparton Partners Collective and its group of companies for a consideration of $40 million payable at completion.
According to the release, the Shepparton Partners Collective is a joint venture between Perma Funds Management and The Eights. The company has significant Australian and international experience in food, supply chain, finance, retail, agri-business and technology, seemingly making the SPC business a good fit for it.
After accounting for forecast working capital balances, working capital adjustments to the sale price, and the costs of disposal, a profit on sale of $10 million to $15 million is expected to be recorded upon completion. Both parties are targeting a completion date before the end of the month.
In addition to the $40 million consideration, the sale agreement also includes a four-year deferred payment which could result in an additional $15 million of sale proceeds. This is subject to SPC's performance over the period.
Pleasingly for SPC's employees, the new owners have committed to grow the Goulburn Valley-based business and are offering employment to all permanent staff.
What now?
This sale has now brought to an end the review and divestment process commenced by Coca-Cola Amatil in August 2018 and, judging by its share price gain, appears to have gone down well with investors.
Which isn't overly surprising given that in FY 2018 the SPC business acted as a drag on its results when it recorded a $10.4 million EBIT loss.
Elsewhere in the sector, this morning the A2 Milk Company Ltd (ASX: A2M) share price has sunk 5% lower and the Freedom Foods Group Ltd (ASX: FNP) share price has edged 0.5% higher.
