Gokongwei firm buys Aussie group in P21-B deal

Gokongwei-led Universal Robina Corp. (URC) has gained a foothold in Australia with a P21.34-billion deal to acquire the Snackbrands group, a leading snackfood manufacturer in this affluent territory in Oceania.

Through URC International Co. Ltd., the group signed a deal to acquire 100 percent of Consolidated Snacks Pty Ltd. (CSPL) in a “cash-free, debt-free” deal valued at 600 million Australian dollars (P21.34 billion), URC disclosed to the Philippine Stock Exchange Wednesday.

CSPL trades under the company name Snackbrands Australia (SBA), the second-biggest player in salty snacks with a total market share of close to 30 percent in Australia. Apart from a wide portfolio of chips including iconic brands like Kettles, Thins, CC’s and Cheezels, SBA is also a preferred private label supplier and partner of the major Australian retailers.

“Cash-free, debt free [deal] means we are acquiring the target company and start with a clean balance sheet. The target company will retire all its debts and take all cash out upon completion,” said Mike Liwanag, URC vice president for investor relations.

With the acquisition, URC plans to create a wider footprint in Oceania with SBA seen providing a solid anchor in the highly competitive Australian fast-moving consumer goods (FMCG) and retailing market. Although Australia has a population base of only 24 million, just a quarter of the Philippine population, its per capita gross domestic product (GDP) is much higher at $61,000—one of the highest in the world and more than 20 times bigger than the Philippine per capita GDP of $2,932.

Driven by a boom in global demand for resources and migration, Australia has grown its GDP twice as fast as other advanced economies, averaging 3.25 percent since 1998 and never falling into technical recession in the last 25 years.

URC’s new acquisition is also seen to unlock synergies with URC and Griffin’s, New Zealand’s number one snackfoods company acquired by URC two years ago.

The transaction has been approved by the board of directors of both companies and is expected to close by Sept. 30 subject to the approval of the Australian Foreign Investment Review Board and the fulfilment of customary closing conditions.

“URC in the past three years has started to look for strategic options on acquisitions or partnerships given the emerging competitive challenges being brought upon by the lifting of trade barriers and the attractiveness of the region where we operate. While we continue to push for innovation as an anchor to sustain our growth, the opportunity came at the right time to acquire a company like Snackbrands. Like URC, SBA is a leading organization with well known and loved brands, operationally efficient and driven by a strong management team,” said URC chief executive officer Lance Gokongwei.

SBA has grown revenues at a compounded annual rate of 7.4 percent in the past four years while cash flow has grown by 32.6 percent over the same period.

Paul Musgrave, SBA CEO said: “SBA is delighted to be a part of the URC family moving forward. As our business has grown we have begun to turn our eyes to new markets and new product segments to be able to leverage our portfolio of much loved brands.”