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 The purchase will give Thai Union control of some of North America's
most well-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 a global
seafood industry that 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 from U.S. antimonopoly authorities, said
Thai Union, whose clients include Wal-Mart Stores Inc <WMT.N> and
Costco Wholesale Corp <COST.O>.
Thiraphong, whose company has operated in the U.S. for over 17
years, said he expected a "positive response" from the authorities.
But Thai Union may have to sell U.S. assets to win antitrust
approval, said a person familiar with the transaction, who asked not
to be identified because of sensitivity of the deal.
Thai Union's Chicken of the Sea is the third-biggest tuna brand in
the U.S. behind Bumble Bee. The top brand, Starkist, is owned by
South Korea's Dongwon Industries Co Ltd <006040.KS>.
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. For further expansion, analysts
said Thai Union's rising debt means the company would need to sell
shares to raise capital.
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Thai Union is open about its 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>.
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 U.S., Thai Union has been active in
Europe since the 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.
(Editing by Muralikumar Anantharaman, Simon Webb and Christopher
Cushing)
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