Del Monte Pacific acquires US food business of Del Monte
MANILA, Philippines–The Campos family-led Del Monte Pacific Ltd. has struck a deal to acquire the consumer food business of private-held American corporation Del Monte Foods (DMF) for $1.675 billion, thereby breaking into the US market and reuniting with its US mother brand.
In a disclosure to the Philippine Stock Exchange on Friday, DMPL – which is controlled by the Campos family’s NutriAsia group – said this acquisition would include DMF’s leading U.S. canned fruit, vegetable and broth business under iconic American brands Del Monte, Contadina, S&W and College Inn.
The deal, which is done through a subsidiary, also adds net sales to DMPL of more than $1.8 billion and adjusted cash flow based on earnings before interest taxes, depreciation and amortization of about $180 million.
The closing of the transaction, which is expected to happen no later than the first quarter of 2014, is subject to regulatory approvals and customary closing conditions.
DMF owns the Del Monte brand rights for processed food products in the United States and South America.
“This landmark transaction offers DMPL greater access to a well-established, attractive and profitable branded consumer food business in the world’s biggest market. Prior to this acquisition, the U.S. was one of few key markets where our Company did not have
a direct presence nor have its own brands,” DMPL chair Rolando Gapud said in a press statement.
“The company expects to generate significant value creation opportunities in the U.S. market through the expansion of DMF’s current product offering to include beverage and culinary products. We also believe that DMF’s consumer food business provides an attractive platform to offer certain products appealing to the large and fast growing Hispanic and Asian American population in the U.S. We are very excited about this historic transaction which reunites a substantial portion of the Del Monte brand family,” he added.
DMPL operates one of the largest pineapple plantations in the world and expects to benefit from much wider access to the processed pineapple business in the U.S., one of the largest packaged fruit segments in the American market. With greater access for its products, The DMPL disclosure said it expected to “realize synergies by leveraging its vertical integration, benefitting from economies of scale and value-added expansion, and optimizing operations over time.”
It is expected that the operating organization of DMF’s consumer food division will largely transfer to the Filipino-owned together with the assets and operations of the business.
DMPL will be finance the transaction through a combination of about $745 million of equity in the company’s new acquisition subsidiary, as well as long-term debt financing of approximately $930 million that have been committed by a syndicate of bank lenders.
As part of the equity financing, DMPL plans to issue common and preferred shares in the market.
Perella Weinberg Partners LLC served as lead financial advisor, and Citibank as a financial advisor to the company, in connection with the transaction.
Citibank and Morgan Stanley are providing committed financing to DMPL’s acquisition subsidiary, while two leading Philippine banks, BDO Capital and Investment Corp. and Bank of the Philippine Islands, are providing committed financing to DMPL, to fund the transaction.
DMPL owns the Del Monte brand for processed products in the Philippines where it enjoys leading market shares for canned pineapple juice and juice drinks, canned pineapple and tropical mixed fruits, tomato sauce, spaghetti sauce and tomato ketchup. Del Monte Pacific also owns another premium brand, S&W, globally except the Americas, Australia and New Zealand. The group owns about 93 percent of a holding company that owns 50 percent of FieldFresh Foods Private Ltd. in India (www.fieldfreshfoods.in). DMPL also holds the exclusive rights to produce and distribute processed food and beverage products under the Del Monte brand in the Indian subcontinent and Myanmar.
With a 23,000-hectare pineapple plantation in the Philippines, 700,000-ton processing capacity and a port beside the Cannery, Del Monte Pacific’s subsidiary, Del Monte Philippines, operates the world’s largest fully-integrated pineapple operation.
