South Africa AVI open to more buyout talks, profit up

JOHANNESBURG (Reuters) - South African consumer goods firm AVI Ltd (AVIJ.J) is open to talks with potential buyers, including a fresh approach from Tiger Brands (TBSJ.J), which axed a takeover attempt last week, its CEO said on Monday.

AVI lost almost a fifth of it value after Tiger scrapped an 8 billion rand ($759.7 million) takeover plan on Thursday, citing tough market conditions and failure to persuade AVI managers to embrace a friendly bid.

Chief Executive Simon Crutchley told Reuters after AVI's first-half results that the board had been worried about the execution risks of the proposed Tiger offer, but that it would consider any fresh approaches, including from its rival.

"Companies are always on the look out... and all companies should be willing to have discussions," he said in a telephone interview. "Yes, we would be willing to talk to anybody."

AVI reported a 12 percent rise in first-half headline earnings per share on Monday, at the top end of its own forecast, thanks to higher sales and food prices.

South African food producers are under pressure from the government and consumer groups to cut prices to reflect easing food inflation and AVI said it was looking at price adjustments across a range of categories, declining to give details.

Shares in the company dipped 1.21 percent to 15.49 rand, lagging a weaker Johannesburg All-share index .

The company said headline EPS from continuing operations for the six months to end December rose to 103 cents compared with a restated 92 cents, which stripped out an Argentinean seafood unit it is selling.

AVI had predicted headline EPS would rise by 5-15 percent.

Revenue from continuing operations gained 18 percent to 4 billion rand and it raised its interim dividend by 9 percent to 26 cents per share.

AVI gave no detailed forecast for the second half but said demand would likely weaken given uncertainty caused by the global economic crisis, and said it would focus on trimming costs, although it did not expect to lay off workers.

Crutchley said January and February sales had fallen short of the company's budget as retailers de-stocked after Christmas more aggressively than expected, but said it was too soon to extrapolate this trend for the second half.

AVI, which lifted cash from operations 17 percent to 650 million rand in the first half, was always on the lookout for acquisitions, particularly in South Africa and the rest of the continent, added.

He said the company had several potential buyers for its Argentinean hake business, mostly based in Latin America, but sealing the deal still dependent on them raising funding.

Headline EPS is the main profit gauge in South Africa and strips out certain one-off, financial and non-trading items.

($1=10.530 Rand)

(Reporting by Rebecca Harrison; Editing by Mike Nesbit)