Coca-Cola Amatil (ASX: CCL) has sold its SPC fruit and vegetable processing business to Shepparton Partners Collective for $40 million.
The company will pocket an expected $10 million to $15 million profit as a result of the sale, after taking into account the costs of disposal.
The sale is expected to be completed by the end of June 2019.
SPC is one of Australia's oldest fruit processors with a diverse number of brands including SPC, Ardmona, Goulburn Valley, and SPC ProVital. The sale of the business does not include the Perfect Fruit and LUMI brands.
The sale of SPC by Coca-Cola follows a strategic review of the business commenced in August 2018. At the time, the fruit brand was dragging Coca-Cola Amatil down according to the chairman David Gonski.
"SPC has been a much-loved part of the Amatil portfolio since 2005 and has a great history as Australia's oldest fruit processing company. We're confident divestment is the right course for SPC," Gonski said at Coca-Cola's last AGM.
"Given the uncertainty of the financial outcome of the sale process and the wide range of offers received, we recognised a non-cash impairment of the carrying value of SPC's net assets to zero in the 2018 financial year. The impairment did not impact the Group's underlying result but was reflected in our statutory result."
Since acquiring SPC in 2005 Coca-Cola Amatil has invested around $250 million into the business, including in technology, operational and energy efficiencies and new equipment.
The new owners of SPC, Shepparton Partners Collective, have committed to growing the Goulburn Valley-based business and is offering employment to all permanent staff.
Coca-Cola Amatil managing director Alison Watkins says Shepparton Partners Collective - a joint venture between Perma Funds Management and The Eights - is the right team to take over the operations.
"This outcome is good news for SPC and good news for the Goulburn Valley," says Watkins.
"Shepparton Partners Collective recognises the value of SPC's brands, the opportunities for innovation and category growth in Australia, and its export potential."
The team has experience in food, supply chain, finance, retail, agri-business and technology having worked with or advised Ernst and Young, Proctor & Gamble, Johnson & Johnson, Cadbury's and Kellogg's.
Managing director of Perma Hussein Rifai says new management will focus on reducing complexity in the business, improving the efficiency of working capital and inventory, building domestic and international channels, and product innovation.
"We are delighted to have acquired SPC, one of Australia's most iconic businesses," says Rifai.
"We believe there is enormous opportunity to grow this unique 100-year-old brand further domestically and internationally."
"The investments made by Coca-Cola Amatil over the years have ensured SPC represents the best of breed in equipment, safety and manufacturing standards and personnel. We need to focus on utilising SPC's full capacity by creating new, innovative products and exploring new distribution channels."
"We are also excited to improve SPC's current offering with exciting initiatives, products and solutions that will appeal to a broader market at home and abroad whilst generating greater returns for stakeholders."
Shares in Coca-Cola Amatil are up 1.39 per cent to $9.50 per share at 10.35am AEST.
Never miss a news update, subscribe here. Follow us on Facebook, LinkedIn, Instagram and Twitter.
Business News Australia
Get our daily business news
Sign up to our free email news updates.
Help us deliver quality journalism to you.
As a free and independent news site providing daily updates
during a period of unprecedented challenges for businesses everywhere
we call on your support