Metro Pacific eyes Del Monte US

Metro Pacific Corp., the local flagship of Hong Kong-based First Pacific Co. Ltd., is setting its sights on Del Monte Foods Co. of the US in line with its plan to venture into the lucrative consumer products business.

Despite having been rebuffed of its plan to acquire Singapore-listed Del Monte Pacific Ltd. (DMPL) last year, First Pacific remains interested in the Del Monte brand given its "unparalleled reputation with consumers for high quality products and innovation," a company official said.

DMPL is now owned by NutriAsia Pacific Ltd., a joint venture between food and beverage giant San Miguel Corp. and condiments and sauces tycoon Joselito Campos, after acquiring the stake of the Lorenzo family in DMPL. It owns the Del Monte brand in the Philippines and holds exclusive rights to produce and distribute food and beverage products under the Del Monte brand in India.

"We are still interested in Del Monte. No, not Del Monte Pacific Ltd. of Singapore, but Del Monte USA," said the source.

The same official said the move is in line with the Metro Pacific Group’s strategic objective of driving growth through selective and related acquisitions to improve overall profit prospects.

"We plan to acquire businesses that represent opportunities for profitable long-term growth. And we feel that Del Monte Foods would be a good acquisition," the company official said.

San Francisco-headquartered Del Monte Foods has grown to become the largest producer and distributor of premium quality processed fruits, vegetables and tomato products in the US.

With annual sales of over $3 billion, Del Monte Foods now has a peak employment of 17,600, including a work force of 7,800 full-time personnel and 9,800 seasonal workers. The company operates 17 production facilities and 18 strategically located distribution centers in North America and state-of-the-art food and pet food research facilities in Walnut Creek and Terminal Island, California.

Additionally, Del Monte has operating facilities and distribution centers in American Samoa, Ecuador and Venezuela.

The same official said Metro Pacific is also looking at acquiring two to three local companies engaged in the food business.

The source declined to name these companies but hinted that they are owned by Chinese families.

First Pacific is also into the food business through its 51.5 percent owned Indofood Sukses Makmur Tbk, the largest vertically integrated, processed food company in Indonesia.

Indofood is the world’s largest instant noodles manufacturer by volume and the largest flour miller in Indonesia. Indofood’s flourmill in Jakarta is one of the largest in the world in terms of production capacity.

Aside from noodles and flour, Indofood also offers snack foods, food seasonings, nutrition and special foods and edible oils and fats.

Metro Pacific has adopted a three-pronged reorganization plan that would involve the creation of a new debt-free investment holding company to continue the expansion of its real estate business, and to raise new capital for planned investments in infrastructure and the consumer products business. The reorganization plan is expected to be completed by September this year.

The new holding company to be named Metro Pacific Investments Corp.(MPIC), will be owned 76 percent by the First Pacific Group and will result in the delisting of Metro Pacific from the Philippine Stock Exchange.

The first stage of the plan involves a decrease in the authorized capital stock of Metro Pacific and a consequent reverse stock split. It also includes the sale of Metro Pacific‚s entire shareholdings in Landco Pacific Corp. at fair value subject to the release of Landco shares which are currently pledged to certain creditors.

The second phase calls for MPIC to offer its shares for all the outstanding shares of Metro Pacific on a one-for-one basis.At the close of this stage, MPIC will own 87 percent of Landco and 100 percent of Metro Pacific which shall continue to exist as an unlisted corporate entity and own shipping firm Negros Navigation Co. and certain other assets.

The third and final stage of the plan involves the implementation by MPIC of a rights issue to raise about P2.7 billion.

Upon completion of the rights issue, MPIC will have a total capital of P4.5 billion, excluding any net profits realized this year in the interim. It shall also be debt-free at the parent level.