South African group Remgro has acquired Unilever’s spreads business in South Africa for R4.9 bn and the 25.75% stake it had in Unilever South Africa.

Unilever’s spreads business in South Africa got a R7 billion ($527.8 million) valuation in a deal which saw South African investment holding company Remgro acquire it from the British-Dutch consumer goods company. The R11.9 billion ($897 million) deal also involved Remgro giving up its 25.75% stake in Unilever South Africa. Remgro had acquired a stake in Unilever South Africa through its local unit Unilever South Africa Foods, back in 2002, following an investment in spices brand Robertsons. Remgro had stated that the stake failed to effectively imprint its strategic direction in the company. This is being pointed as a reason for the Remgro’s wish to give it up in the current deal.

On the contrary, Remgro has said that it is confident of the potentials of Unilever’s spreads business, under full ownership of Remgro. Jannue Durand, CEO of Remgro said that it “is an attractive business, with leading brands which include Rama, Stork, Flora and Rondo with good growth prospects.” Aside from South Africa, Remgro will now also control Unilever’s spreads in Botswana, Lesotho, Namibia and Swaziland.

Unilever South Africa also reacted positively to the deal. Executive Vice President Luc Olivier Marquet said that “by giving us full ownership of the business, this transaction means we are better placed to accelerate that growth while the spreads business moves on to Remgro where it augments their current portfolio and can be sure of a great future (…)”.

Unilever spreads business has seen a decline in the last few years and the company had announced the selling of some of its brands, expecting to cash in $8.1 billion. In South Africa specifically, recession and high unemployment rates have slowed down consumer spending and seen some Unilever rivals, such as Tiger Brands focusing on strategies for increased savings.

The deal is expected to be fully concluded by Q1 2018.