SMC, Campos team up to acquire Del Monte

The Lorenzo family has found a white knight in leading food and beverage conglomerate San Miguel Corp. (SMC) in the former’s bid to thwart attempts by Hong Kong-based First Pacific Co. Inc. to acquire Del Monte Pacific Ltd. (DMPL) by selling its stake to SMC and NutriAsia of the Campos family.

SMC and NutriAsia, majority owned by the family of Joselito ‘Butch’ Campos, Jr., have formed a joint venture company to acquire Del Monte. The acquisition will be made initially by acquiring the Lorenzos’ 22-percent stake in DMPL and then matching the $164-million offer made by First Pacific to purchase the 40-percent stake of Italy’s Cirio in DMPL.

The acquisition of DMPL by SMC and NutriAsia will initially consist of shares from the Cirio Group and Macondray and Co. Inc. (MCl Inc.) owned by the Lorenzo family but will trigger a mandatory general offer for all shares in DMPL held by the public.

The total value of acquiring 100 percent of DMPL is estimated to be $420 million.

Under a joint venture agreement between SMC and NutriAsia, the latter will own 58 percent of the joint venture company, with SMC owning the remaining 42 percent. The joint venture company will take out a loan from a bank consortium composed of Hong Kong Shanghai Banking Corp. Ltd., Development Bank of the Philippines, and BDO Capital and Investment Corp., to complete funding of the entire transaction. HSBC acted as adviser to the acquisition financing.

The STAR earlier disclosed that Campos offered to finance the bid to match First Pacific’s offer, since the Lorenzos on their own do not have the funds to come up with $164 million. Campos has reportedly promised a special arrangement with certain Lorenzo family insiders as part of the agreement to permit him to raise the money for the counter-offer.

DMPL owns Del Monte brand rights for the Philippines and the Indian subcontinent. The company also has long-term contracts to supply canned pineapple juice and mixed tropical fruits to North America, Europe and the Far East.

Beverages comprise 27 percent of DMPL’s total revenues, with 67 percent coming from processed food and five percent from non-processed food last year. The DMPL portfolio includes canned fruits, a variety of tomato-based sauces, fruit salad cream, pasta, condiments, juice drinks and concentrates, and one of the world’s largest and most efficient pineapple plantations. In the Philippines, products are sold under the Del Monte and Today’s brands.

DMPL has strong market position in the Philippines with over 85-percent market share in pineapple solids and about 80 percent in mixed fruits and tomato sauce. NutriAsia, meanwhile, produces tomato- and banana-based ketchup and other food products.

Branded food products represent 50 percent of DMPL sales. It provides strong complementation to the Campos Group’s existing condiments and sauce business, SMC said.

Joselito Campos, Jr. said, "This is an exciting opportunity to continue to build great brands. Together with San Miguel Corp., we will continue the exceptional growth of the brand and further strengthen DMPL’s geographical reach."

For his part, SMC chairman and CEO Eduardo Cojuangco, Jr. said: "We are impressed with the success the DMPL team has achieved.

Our businesses share a passion for quality products in food and beverages, so this is a very natural fit. Our partnership in NutriAsia will aid us in the development of our future strategic marketing efforts as we continue to offer together brands from DMPL, San Miguel and NutriAsia portfolios which then gives us an excellent platform for growth and value creation for both partners."