Although mired in controversy, the sale of Africa’s biggest cattle company appears to have gone through for a deal worth C$472 million.
Based in South Africa, the majority share of Karan Beef has been acquired by a joint purchase including South Africa’s Public Investment Corp. (PIC), the manager of pension funds for South Africa’s government employees, and Pelo Agricultural Ventures.
Although the South African government has already investigated and issued fines against Karan Beef and another beef processor, I&J, for collusion, this will not affect the sale going ahead.
Back in 1974, the Karan family started their beef empire with less than 100 head of cattle. Roll on 44 years and it now is the African continent’s largest cattle feedlot with 150,000 cattle. It also owns three adjoining farms, an abattoir with a capacity of 2,100 head per day, and a distribution centre.
South Africans love beef and in 2017 the population of 55 million consumed 869,400 tons of beef, which helped Karan Beef succeed. The company supplies the domestic market, as well as exporting to United Arab Emirates, Kuwait, Qatar, Bahrain, Oman, Jordan, Egypt, Mauritius, Seychelles, Maldives, China, and Hong Kong.
South Africa has plans to return white-owned farmland to the black community and this deal is being hailed as a major step forward in that direction.
Pelo Agricultural Ventures is a domestic, black-owned and managed agricultural investment firm, which said it is willing to work with the Karan company to achieve growth.
The chief executive officer of PIC Daniel Matjila called it an historic deal.
“We are particularly happy that the Karan family has decided to sell part of this important asset to South Africans, ensuring that ownership remains local and in black control.”
Ivor Karan, owner of Karan Beef, was happy the company will remain in South African control.
“This is a ground-breaking deal for agriculture in SA and we must celebrate the fact that the company will remain South African,” he said.
Karan Beef and I&J had been investigated by the government’s competition commission for collusion. Both companies were charged with dividing markets in the supply of processed beef products.
The investigation found that from 2000 until recently, Karan Beef and I&J entered into a manufacturing agreement in which Karan Beef stopped producing certain processed beef products for its own account and produced it on behalf of I&J.
The agreement also entailed that Karan Beef should not sell certain of its processed beef products to certain customers, which were reserved for I&J.
Karan Beef has already admitted guilt and paid an administrative penalty of $250,000 to the commission.