Power companies JP, Wisynco join forces on snacks
Wisynco Group is buying a stake in the snacks business owned by Jamaica Producers Group, a deal that is meant to drive distribution of the products in existing and new markets.
The $720-million transaction for 30 per cent of JP Snacks Caribbean Limited is expected to close at month end. Jamaica Producers will retain the other 70 per cent.
JP Snacks operates out of a distribution centre in Kingston, with snack factories both in Jamaica and the Dominican Republic. It distributes under the St Mary’s and Monte Cristi brands to markets in Jamaica and the Caribbean, United States, Canada, United Kingdom and Central America, but also packages tropical snacks for third-party brands in English-and Spanish-language markets across the region.
In market filings on the deal, Jamaica Producers and Wisynco said in separate statements that 30 per cent of shares in JP Snacks would be transferred to a holding company that will own the JP St Mary’s brand and JP’s tropical snack manufacturing operations.
The transaction values JP Snacks at $2.4 billion.
Hall said Wisynco will take over the distribution of JP Snacks, which is now held by third parties.
This acquisition aligns with the approach taken by Wisynco for other acquisitions in the past, including last year’s sugar and rum distribution deal with Worthy Park Estates in which the beverage maker acquired 35 per cent of the agricultural operation. Years before that, Wisynco acquired half of Tru-Juice maker Trade Winds Citrus Limited.
Wisynco is a manufacturer of beverages, including its own brands WATA, CranWATA, Boom energy drink and Bigga soft drinks, as well as bottler for Coca-Cola Company, but it is also a distributor of thousands of local and foreign products.
On Wednesday, Hall said at a joint press conference, called to announce the deal, that the two Jamaican companies were combining – similar to a relay team - to secure success on a global level.
He said JP Snacks – which falls under the JP Tropical division at Jamaica Producers Group – saw double-digit growth in 2018 over 2017, but declined to share revenue and profit figures.
Chairman of Wisynco William Mahfood said the JP Tropical brands, Tru-Juice and Worthy Park represented a triple play of brands that were likely to be appealing to international distributors.
“They will be combining to make a much better package to the distributors in the United States and the Caribbean,” he said.
Mahfood added that while Wisynco has an arrangement with food and financial services conglomerate GraceKennedy for distribution in the UK, and with three different distributors in the United States and another in Canada, it was yet to be determined whether these channels would be used for the snacks. Discussions with Jamaica Producers about the overseas distribution arrangements are still under way, he said.
He said the deal does not include rum cake company Tortuga.
The partnership will free Jamaica Producers to focus on product innovation and growth. An investment plan for JP Snacks is to be rolled out over 12-18 months, Hall told the Financial Gleaner.
The $720 million from Wisynco will not be invested in JP Snacks, but would finance capex plans in other areas of the group, he said.
Mahfood is projecting a five to six per cent uptick in revenues for Wisynco resulting from the JP Snack deal.
“It will have a significant impact,” the Wisynco chairman said.