RFM acquires Royal pasta brand

MANILA, Philippines - Food and beverage firm RFM Corp. has strengthened its foothold in the pasta segment with the acquisition of the pasta business of Anglo-Dutch consumer goods giant Unilever Group for more than P2 billion.

The deal that combines the two largest pasta makers in the country will allow RFM to significantly boost its market share, officials said yesterday.

In a regulatory filing,  RFM, the maker of Selecta ice cream and Fiesta pasta, said it acquired the brand Royal and pasta business of the Unilever Group.

“The transaction was valued at $47.8 million or over P2.1 billion, covering mainly the Royal trademarks, goodwill and inventories,” RFM said.

RFM president and CEO Jose A. Concepcion III said the Royal brand, which has a premium price point, will strengthen the market leadership of RFM and complement the value-positioning of the Fiesta brand.

“I estimate our market share to go beyond 50 percent with the acquisition,” said RFM chief operating officer Felicisimo M. Nacino Jr. As of end-2013, Fiesta pasta cornered 35 percent of the market.

Fiesta and Royal brands are the market leaders in spaghetti, macaroni, and pasta-and-sauce bundles that provide more convenient easy-to-prepare pasta meals.

Concepcion said the company plans to grow the pasta market by offering ready-to-cook and affordable pasta meals to Filipino consumers.

Proceeds from RFM’s P1.62-billion private placement last October will fund the acquisition, with the balance to be sourced from internally generated cash.

RFM said the Royal brand brings a solid and enduring heritage value with around 58 years of experience in the Philippines.

RFM vice-president Ramon M. Lopez said the acquisition will boost the company’s earnings, with the 15-20 percent income growth target this year to be upgraded.

“The acquisition is expected to boost topline revenues of RFM, and will more than offset the lost revenues out of its selling the Swift meat business in late 2012,” the company said.

RFM posted a 19-percent profit growth to P525 million in January to September last year from P441 million a year ago. Its revenues fell nine percent to P7.1 billion in the nine-month period from P7.8 billion in 2012 as it unloaded its meat business to the Century Pacific group.

Moving forward, RFM said it will continue looking for acquisitions to strengthen its position in the food and beverage categories.

Aside from pasta, RFM is also into ice cream through Selecta, a joint venture with Unilever; White King cake and sauce mixes; and Sunkist beverage.