Libstar Board Rejects Takeover Bids, Citing Undervaluation Amid Restructuring

Johannesburg-listed food group Libstar has formally ended all talks regarding a potential sale, declaring that unsolicited takeover approaches significantly undervalue the business. The company, which houses a portfolio of dairy, ready meals, snacks, and condiment brands, made the announcement via a stock exchange filing on Monday.

Libstar first disclosed it had received interest from unnamed parties in September last year. After a five-month review, the board has now unanimously decided not to proceed. "Following a comprehensive assessment," the filing stated, "the board has resolved not to progress engagements with any potential investors... the non-binding expressions of interest received are not reflective of the fair value of Libstar."

The decision is rooted in the board's confidence in Libstar's medium-to-long-term strategy and improving financial trajectory. This comes against a backdrop of ongoing restructuring, including the recent divestment of its fresh mushroom operations—though it retained the Denny mushroom brand—and a focus on simplifying its operating model.

In a trading update last week, Libstar indicated an improvement in base profits for the year ended 31 December, driven by its perishable foods and wet condiments divisions. However, it also flagged another impairment charge, this time linked to its Ambassador Foods snacks unit, amounting to R227.4 million ($13.9 million). This follows a larger R508.7 million impairment booked the previous year across several business units.

Looking ahead to its full-year results scheduled for 17 March, Libstar projected headline earnings per share (HEPS) to rise to between 50.4 and 52.5 cents, up from 42.1 cents a year earlier. Normalised HEPS from continuing operations is forecast to show stronger growth.

The move to reject takeover interest signals the board's belief that more value can be created independently through its current strategic plan. "Libstar remains focused on the execution of its strategy, including portfolio simplification, category growth, and sustainable value creation for all stakeholders," the company affirmed.

Market Voices

David Nkosi, Portfolio Manager at Capetown Investments: "This is a prudent, if unsurprising, decision. The bids likely failed to price in the operational turnaround underway. The improving HEPS guidance suggests internal value creation may outpace what outsiders were willing to pay."

Sarah van der Merwe, Consumer Analyst at Johannesburg Securities: "The board is playing a long game. Exiting non-core assets like mushrooms sharpens their focus. Rejecting low-ball offers reinforces their commitment to this refined strategy, though it places immediate pressure on the upcoming results to justify the confidence."

Michael Pretorius, Independent Shareholder Advocate: "It's outrageous. Shareholders have endured years of impairments and volatility. Now, when a potential exit emerges, the board slams the door without even disclosing the bids or engaging properly. What exactly is this 'fair value' they're guarding so fiercely? They owe us transparency."

Grace Olunowo, Food & Agri Business Consultant: "The South African consumer goods landscape is challenging. Libstar's decision indicates they see a clear, executable path to stabilize and grow their core categories—like dairy and condiments—which are defensive yet competitive. Walking away from a sale takes conviction."