Sea Harvest cuts cheese to net bigger seafood gains

The Sea Harvest Group is fundamentally clarifying its strategy by selling its dairy subsidiary, Ladismith Cheese Company, to Fairfield Dairy – a wholly owned subsidiary of the Woodlands Dairy Group – in an R850-million transaction. The all-cash disposal is designed to reduce significant long-term debt and sharpen the listed company’s operational focus on its core global seafood assets.

The tension in the deal lies in Sea Harvest giving up a performing asset to fund a strategic retreat. Ladismith Cheese reported profit after tax of R32-million for the six months ended June 2025, and the reported net asset value of R980-million suggests Woodlands is picking up a good deal.

For Woodlands/Fairfield, the acquisition represents a calculated expansion into a Western Cape production hub and a deepening of product expertise in a consolidating dairy market.

South Africans love their cheese, second only to Egyptians

A February 2025 report by the US Department of Agriculture’s Foreign Agricultural Service dated February 2025 says South Africa has the second-highest per-capita consumption of cheese in Africa, after Egypt, with South Africans consuming a statistical average of 5.5kg a year per person.

Information from US Department of Agriculture’s Foreign Agricultural Service, graphic by Nanobanana Pro

The report notes that processed cheese consumption in South Africa is relatively high because of affordability, convenience, fast-food industry demand and long shelf life. This is a result of the rising demand for ready-to-eat and easy-to-prepare foods.

Sea Harvest Group was approached for additional comment on the disposal, but declined to provide further information at this stage.

Sea Harvest: shedding assets to fund core strength

The rationale for the disposal stems from capital-allocation discipline and a commitment to deleveraging the balance sheet. Sea Harvest’s strategy, outlined earlier this year, committed to reducing debt by 50% within three years through the sale of non-fishing assets. The R840-million to R850-million enterprise value attached to Ladismith Cheese makes this the largest disposal of a non-fishing asset under that programme.

Proceeds from the sale will go directly towards repaying long-term debt in Sea Harvest’s South African operations. This reflects operational reality: the company’s core South African Fishing Group remains its primary engine of profitability, accounting for 64% of group revenue in the first half of 2025. The group’s net debt-to-Ebitda ratio improved to 2.1 times in the first half of 2025, down from 2.5 times in December 2024 – progress that the disposal will further accelerate.

The fishing segment’s strong performance – driven by a 15% increase in hake catch volumes and 10% higher international selling prices – stands in sharp contrast to weaker business units such as aquaculture, which continues to face pressure from soft Chinese demand and substantial fair-value losses on biological assets.

Sea Harvest CEO Felix Ratheb said: “In line with the strategic objectives presented to shareholders in early 2025, Sea Harvest intends deleveraging its balance sheet through the disposal of non-fishing assets, and refocusing on its seafood businesses.”

Before the deal goes though, Sea Harvest plans to restructure such that Ladismith Cheese will become a direct subsidiary, rather than a subsidiary of Cape Harvest Food Group, which is another subsidiary of Sea Harvest. This will facilitate a cleaner sale.

Woodlands Dairy: a strategically important expansion

For the Woodlands Dairy Group, the acquisition significantly expands both capability and national footprint. Woodlands, a major producer specialising in UHT milk and a diversified First Choice product portfolio, sees Ladismith Cheese as a natural extension of its strengths.

CEO Helen McDougall confirmed the commercial logic, saying the deal “aligns perfectly with our vision to deliver high-quality, sustainable dairy products to a growing market”.

Ladismith’s expertise in cheese, butter and milk powder deepens the group’s product offering and broadens its presence across key dairy categories. The acquisition also enhances geographic reach: Woodlands anchors the Eastern Cape, Ladismith adds capacity in the Western Cape and Fairfield strengthens the group’s presence in KwaZulu-Natal.

Woodlands Dairy chairperson Lex Gutsche noted that the transaction will result in the group becoming the largest wholly South African-owned dairy company, with 25% black ownership.

Woodlands Dairy is beneficially owned by Gutsche Family Investments Proprietary Limited, which holds a 74.99% shareholding, while two black-owned companies, African Pioneer Group and Nozala Investments, collectively hold the remaining 25.01%.

On operational continuity, McDougall emphasised stability: “Ladismith Cheese will continue operating under its established brand, with no immediate changes to its facilities, workforce or day-to-day operations.” The business employs about 580 staff. Current employment arrangements, including benefits such as retirement provisions, are expected to hold steady during the integration phase.

Deal mechanics and regulatory path

The purchase consideration – based on an enterprise value of R840-million and capped at R850-million after working-capital and net-debt adjustments – will be settled entirely in cash.

But it’s not time to celebrate a sale just yet. The transaction remains subject to several suspensive conditions, including approval and release from Sea Harvest’s third-party lenders by 15 January 2026, and approval from the Competition Authority by 31 March 2026. The effective date will fall on the final day of the month on which all conditions are met or waived. Woodlands expects the regulatory timeline to follow routine competition processes, with all entities operating independently until approval is granted.

The sale underscores a broader truth in a difficult food-production market: companies extract maximum value when they commit to strategic clarity and allocate capital to the verticals where they are most competitive. DM