RFM Corp. has concluded a deal to acquire the Unilever group’s Royal brand and pasta business for $47.8 million, cementing the food group’s market leadership in the pasta category with a combined market share of over 50 percent.
RFM president and CEO Jose A. Concepcion III said the acquisition of the Royal brand—the second largest in the Philippines—would not only strengthen its market leadership but also complement the value-positioning of its Fiesta brand.
The 58-year-old Royal brand carries a “premium” price point in the Philippines and is known and loved by generations of Filipino families, Concepcion said in a statement Thursday.
RFM’s Fiesta is the country’s leading brand in the pasta category.
Both Fiesta and Royal brands offer spaghetti, macaroni and pasta-and-sauce bundles that provide more convenient easy-to-prepare meals.
In a disclosure to the Philippine Stock Exchange, RFM said the transaction value of $47.8 million, or over P2.1 billion, covered mainly the Royal trademarks, goodwill and inventories. The deal is subject to customary closing requirements.
In October last year, RFM reported that it had raised around P1.6 billion from an equity deal to prepare itself for expansion. Concepcion said that, apart from internally generated cash flows, the proceeds from that offering helped fund the Royal acquisition.
In its disclosure, RFM said it would continue to look for acquisitions that would strengthen its position in the food and beverage categories.
“The acquisition is expected to boost top-line revenues of RFM, and will more than offset the lost revenues” the company incurred when it sold the Swift meat business, the disclosure said.
In late 2012, RFM sold its Swift-branded business to a unit of the Po family’s Century Canning group for up to P850 million.
Aside from pasta, RFM is also in a joint venture with Unilever for Selecta ice cream. The company likewise has a positive outlook on its other brands, such as White King cake and sauce mixes, baked bread, Selecta milk and Sunkist beverage, as consumer spending promises to be strong this year, Concepcion said.