Johannesburg, Nov 17 - South Africa's Tiger Brands Ltd may make an 8 billion rand ($786.4 million) cash- and-shares offer for AVI to create a focused consumer goods group able to expand into Africa.
Consumer goods company Tiger Brands said on Monday it was considering offering 24 rand per share, implying a total equity value of 8 billion rand for the branded food and drinks group.
Tiger Brands said that represented a 62 percent premium to AVI's share price on the last trading day prior to the announcement.
Shares in AVI leapt 42 percent to 21 rand by 0729 GMT. Tiger Brands stock slid more than 5 percent but recovered to trade 2.2 percent lower at 134 rand by 0725 GMT.
A spokeswoman for AVI, which is behind Five Roses tea and Frisco coffee and distributes Prada and DKNY brands in South Africa, said the company could not immediately comment on the potential offer and was preparing a statement.
Tiger Brands said it had acquired 15.85 million shares in AVI, representing approximately 4.6 percent of the company's issued share capital. The offer would include 14.40 rand in cash for every AVI share and 6.989 Tiger Brands shares for every 100 AVI shares.
Tiger Brands, which spun off its pharmaceutical unit Adcock this year to focus on consumer goods, said a tie-up with AVI would create a more focused and efficient fast-moving consumer goods company.
"It will allow the combined entity to improve its global competitiveness for the benefit of consumers, customers and other stakeholders and will provide a stronger base to expand further into the rest of Africa," Tiger Brands said.
Tiger Brands sells food and consumer healthcare products and has a fishing business. It said the decision to proceed with a firm intention to make an offer was subject to the finalisation of funding and obtaining the support of shareholders.
Tiger Brands was due to hold a conference call at 0730 GMT.