Philippines: San Miguel forms joint venture with NutriAsia to to acquire Del Monte Pacific
San Miguel Corporation (SMC) announced on December 2 that in a move that will enable continued growth of their core food and beverage businesses and further their international exposure, San Miguel Corporation (SMC) and NutriAsia, Inc. (NutriAsia), majority owned by the family of Joselito D. Campos, Jr., confirmed today1 that they have formed a joint venture company to acquire Del Monte Pacific, Ltd. (DMPL), .
DMPL owns Del Monte brand rights for the Philippines and the Indian sub-continent. 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% of DMPL's total revenues, with 67% coming from processed food and 5% from non-processed food for the year ended December 2004.
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% market share in pineapple solids and about 80% in mixed fruits and tomato sauce.
NutriAsia, Inc. produces tomato- and banana-based ketchup and other food products.The acquisition of DMPL by SMC and NutriAsia will initially consist of shares from the Cirio Group and MCl, Inc. The acquisition of the combined stake triggers a mandatory general offer for all shares in DMPL. The total value is estimated to be US$420 million.
Under a joint venture agreement between SMC and NutriAsia, NutriAsia will own 58% of the joint venture company, with San Miguel owning the remaining 42%. The joint venture company will take out a loan from a bank consortium composed of Hong Kong Shanghai Banking Corporation Limited, Development Bank of the Philippines, and BDO Capital and Investment Corporation, to complete funding of the entire transaction. HSBC acted as adviser to the acquisition financing.
The transaction brings to both SMC and NutriAsia, products enjoying leadership positions in pineapple juice and solids, juice drinks, tomato-based ketchup and sauces, and other condiments. Branded food products represent 50% of DMPL sales. It provides strong complementation to the Campos Group's existing condiments and sauce business.
Joselito D. Campos, Jr. said, "This is an exciting opportunity to continue to build great brands. Together with San Miguel Corporation, we will continue the exceptional growth of the brand and further strengthen DMPL's geographical reach.
Eduardo M. Cojuangco, Jr. Chairman and Chief Executive Officer of San Miguel Corporation 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," stated Cojuangco.
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