mick silver
20th December 2014, 02:01 PM
Thai Union Frozen to buy U.S. tuna firm Bumble Bee for $1.5 billionFri Dec 19, 2014 11:47am ESThttp://mobile.reuters.com/do/getNewsImages?n=21&u=USKBN0JX05G20141219
By Khettiya Jittapong and Manunphattr Dhanananphorn
BANGKOK (Reuters) - Thai Union Frozen Products PCL (TUF.BK (http://mobile.reuters.com/quoteSearchResults?symbol=TUF.BK&irpc=932)), the world's biggest producer of canned tuna, has agreed to buy U.S. competitor Bumble Bee Seafoods for $1.5 billion as part of a plan to double revenue through overseas acquisitions.
The purchase will give Thai Union control of some of North America's best-known seafood lines, including two of the three biggest canned tuna brands in the United States, in its quest to reach revenue of $8 billion by 2020.
"The deal is the largest acquisition in the history of our company and one of the most exciting external growth propositions," Thai Union President and Chief Executive Thiraphong Chansiri told reporters on Friday.
The deal marks the latest instance of consolidation in the global seafood industry, which analysts say has been in flux over the past few years as companies change the way they manage supplies and costs to better cater to shifting consumer demand.
The transaction is likely to be completed in the second half of next year, subject to approval by U.S. antitrust authorities, said Thai Union, whose clients include Wal-Mart Stores Inc (WMT.N (http://mobile.reuters.com/quoteSearchResults?symbol=WMT.N&irpc=932)) and Costco Wholesale Corp (COST.O (http://mobile.reuters.com/quoteSearchResults?symbol=COST.O&irpc=932)).
Thai Union has operated in the United States for over 17 years, and Thiraphong said he expects a "positive response" from the authorities.
Thai Union's Chicken of the Sea is the third-biggest tuna brand in the United States behind Bumble Bee. The top brand, Starkist, is owned by South Korea's Dongwon Industries Co Ltd (006040.KS (http://mobile.reuters.com/quoteSearchResults?symbol=006040.KS&irpc=932)).
With so few canned tuna producers, major asset sales will be needed to persuade U.S. antitrust authorities to allow the deal to proceed as tuna consumption is declining, antitrust experts said.
"This potential merger will raise concerns with U.S. regulators and may lead to an agreement to a divestiture of U.S. assets if they can find a willing buyer. I don't think this merger would breeze through," said Jeffrey Jacobovitz, an antitrust expert at Arnall Golden Gregory LLP.
CASH CALL
Bumble Bee is the largest canned tuna and sardine producer in North America, with brands including Brunswick and Sweet Sue. It is owned by pan-Atlantic private equity firm Lion Capital, which bought the seafood maker from another private equity firm for $980 million in 2010.
It has annual sales of about $1 billion and estimated EBITDA of $145 million for 2014. Its purchase should boost Thai Union's sales next year to $5 billion from $4 billion, Thiraphong said.
The transaction is valued at 8.6 times Bumble Bee's 2014 estimated EBITDA, Bumble Bee said in a separate statement.
The acquisition would be Thai Union's third this year after the purchase of Norwegian canned fish producer King Oscar and French smoked salmon supplier MerAlliance. Analysts said Thai Union's rising debt means the company will need to sell shares to raise capital to expand further.
Thai Union is open to funding options to bring down its debt-to-equity ratio, which will rise after the Bumble Bee purchase to 2.0 times, or double the company's target, Thiraphong said.
But the acquisition should boost Thai Union's 15 percent to 17 percent gross margin, Thirapong said, as Bumble Bee's margin is more than 20 percent.
Shares of Thai Union closed down 3.5 percent after Friday's Bumble Bee announcement, compared with a 0.2 percent decline in the benchmark index (.SETI (http://mobile.reuters.com/marketIndex?symbol=.SETI&irpc=932)).
YOUNG PRESIDENT
Thiraphong, 49, is the eldest son of Thai Union co-founder and Chairman Kraison Chansiri, and took over as president when he was 30.
Kraisorn was born in Guangdong province, China, and started the business 37 years ago with a tuna cannery in the Thai province of Samut Sakhon, southeast of Bangkok. Tuna now makes up 47 percent of sales, with shrimp 24 percent and the rest from sardines, salmon, pet food and other products.
As well as Thailand and the United States, Thai Union has been active in Europe since its 2010 purchase of MW Brand PLC [MWBND.UL].
For its latest acquisition, Thai Union has hired UBS as adviser while Bumble Bee is being advised by Morgan Stanley and Rothschild.
Thai Union is financing the purchase with the help of a one-year bridge loan from Bangkok Bank and Siam Commercial Bank, executives from the two banks said.
(Additional reporting by Diane Bartz in Washington; Editing by Muralikumar Anantharaman, Simon Webb, Christopher Cushing and Peter Galloway)
By Khettiya Jittapong and Manunphattr Dhanananphorn
BANGKOK (Reuters) - Thai Union Frozen Products PCL (TUF.BK (http://mobile.reuters.com/quoteSearchResults?symbol=TUF.BK&irpc=932)), the world's biggest producer of canned tuna, has agreed to buy U.S. competitor Bumble Bee Seafoods for $1.5 billion as part of a plan to double revenue through overseas acquisitions.
The purchase will give Thai Union control of some of North America's best-known seafood lines, including two of the three biggest canned tuna brands in the United States, in its quest to reach revenue of $8 billion by 2020.
"The deal is the largest acquisition in the history of our company and one of the most exciting external growth propositions," Thai Union President and Chief Executive Thiraphong Chansiri told reporters on Friday.
The deal marks the latest instance of consolidation in the global seafood industry, which analysts say has been in flux over the past few years as companies change the way they manage supplies and costs to better cater to shifting consumer demand.
The transaction is likely to be completed in the second half of next year, subject to approval by U.S. antitrust authorities, said Thai Union, whose clients include Wal-Mart Stores Inc (WMT.N (http://mobile.reuters.com/quoteSearchResults?symbol=WMT.N&irpc=932)) and Costco Wholesale Corp (COST.O (http://mobile.reuters.com/quoteSearchResults?symbol=COST.O&irpc=932)).
Thai Union has operated in the United States for over 17 years, and Thiraphong said he expects a "positive response" from the authorities.
Thai Union's Chicken of the Sea is the third-biggest tuna brand in the United States behind Bumble Bee. The top brand, Starkist, is owned by South Korea's Dongwon Industries Co Ltd (006040.KS (http://mobile.reuters.com/quoteSearchResults?symbol=006040.KS&irpc=932)).
With so few canned tuna producers, major asset sales will be needed to persuade U.S. antitrust authorities to allow the deal to proceed as tuna consumption is declining, antitrust experts said.
"This potential merger will raise concerns with U.S. regulators and may lead to an agreement to a divestiture of U.S. assets if they can find a willing buyer. I don't think this merger would breeze through," said Jeffrey Jacobovitz, an antitrust expert at Arnall Golden Gregory LLP.
CASH CALL
Bumble Bee is the largest canned tuna and sardine producer in North America, with brands including Brunswick and Sweet Sue. It is owned by pan-Atlantic private equity firm Lion Capital, which bought the seafood maker from another private equity firm for $980 million in 2010.
It has annual sales of about $1 billion and estimated EBITDA of $145 million for 2014. Its purchase should boost Thai Union's sales next year to $5 billion from $4 billion, Thiraphong said.
The transaction is valued at 8.6 times Bumble Bee's 2014 estimated EBITDA, Bumble Bee said in a separate statement.
The acquisition would be Thai Union's third this year after the purchase of Norwegian canned fish producer King Oscar and French smoked salmon supplier MerAlliance. Analysts said Thai Union's rising debt means the company will need to sell shares to raise capital to expand further.
Thai Union is open to funding options to bring down its debt-to-equity ratio, which will rise after the Bumble Bee purchase to 2.0 times, or double the company's target, Thiraphong said.
But the acquisition should boost Thai Union's 15 percent to 17 percent gross margin, Thirapong said, as Bumble Bee's margin is more than 20 percent.
Shares of Thai Union closed down 3.5 percent after Friday's Bumble Bee announcement, compared with a 0.2 percent decline in the benchmark index (.SETI (http://mobile.reuters.com/marketIndex?symbol=.SETI&irpc=932)).
YOUNG PRESIDENT
Thiraphong, 49, is the eldest son of Thai Union co-founder and Chairman Kraison Chansiri, and took over as president when he was 30.
Kraisorn was born in Guangdong province, China, and started the business 37 years ago with a tuna cannery in the Thai province of Samut Sakhon, southeast of Bangkok. Tuna now makes up 47 percent of sales, with shrimp 24 percent and the rest from sardines, salmon, pet food and other products.
As well as Thailand and the United States, Thai Union has been active in Europe since its 2010 purchase of MW Brand PLC [MWBND.UL].
For its latest acquisition, Thai Union has hired UBS as adviser while Bumble Bee is being advised by Morgan Stanley and Rothschild.
Thai Union is financing the purchase with the help of a one-year bridge loan from Bangkok Bank and Siam Commercial Bank, executives from the two banks said.
(Additional reporting by Diane Bartz in Washington; Editing by Muralikumar Anantharaman, Simon Webb, Christopher Cushing and Peter Galloway)