San Miguel-NutriAsia beat First Pacific in Del Monte Pacific purchase (BusinessWorld)

Published in the December 3, 2005 issue of BusinessWorld

Today’s Headlines BY JENNEE GRACE U. RUBRICO, Senior Reporter San Miguel-NutriAsia beat First Pacific in Del Monte Pacific purchase Food and beverage giant San Miguel Corp. has tied up with the Jose Campos Jr.-owned NutriAsia, Inc. to acquire Del Monte Pacific Ltd. from the Lorenzo family, edging out competing buyer First Pacific Co. Ltd. "The total value is estimated to be $420 million," according to a statement from San Miguel. The transaction was disclosed at the Singapore stock exchange where Del Monte Pacific is listed. The acquisition of the 49.76% stake triggered a mandatory general offer for all the shares in Del Monte Pacific by the joint venture. Under Singapore stock exchange rules, the 30% acquisition of a listed company would require the buyer to offer to purchase all the shares in the company. The new owners of Del Monte Pacific (58% by NutriAsia and 42% by San Miguel) will take out a loan from a bank consortium composed of HSBC, Development Bank of the Philippines and BDO Capital and Investment Corp. to fund the entire transaction. HSBC acted as financial adviser. Under the deal, NutriAsia agreed to buy the shares of stock held by Cirio through Del Monte Holdings Ltd., and those that are held by Lorenzo firm MCI, Inc. On Dec. 1, MCI had agreed to exercise its preemption rights by accepting Del Monte Holdings’ offer to sell a total of 310.772 million shares, or 28% of the unissued share capital of Del Monte Pacific, for $118.652 million, or $0.3818 per share. "Pursuant to the transaction agreement, MCI had on Dec. 1, 2005 accepted the preemption offer and the sale of the [Del Monte Holdings] shares to MCI pursuant to such acceptance is deemed to have taken placeŠ The acceptance of the preemption offer resulted in MCI’s shareholding in [Del Monte Pacific] increasing from 227.467 million shares, representing approximately 21.03% of the issued share capital of [Del Monte Pacific]Š to 538.24 million shares, representing approximately 49.76% of the issued share capital of [Del Monte Pacific]Š triggering a mandatory offer," stated the mandatory conditional cash offer submitted by PricewaterhouseCoopers Corporate Finance Pte. Ltd. on behalf of NutriAsia. Also on Dec. 1, NutriAsia agreed to grant MCI a put option to require the former to purchase a total of 538.24 million shares, or 49.76% of Del Monte Pacific, for $206.5 million. "On the date thereof, MCI has also exercised the put option. Accordingly, completion of the exercise of the put option today, the offeror’s [NutriAsia] shareholding in [Del Monte Pacific] will be 538,240,429 shares, representing approximately 49.76% of the issued shares capital of [Del Monte Pacific]," PricewaterhouseCoopers added. Following the completion of the two transactions, MCI no longer holds a stake in Del Monte Pacific. Del Monte Pacific 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 East Asia. Beverages comprises 27% of Del Monte Pacific’s total revenues, 67% from processed food and 5% from non-processed food for the year ended December 2004. The company’s portfolio include 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, the products are sold under the Del Monte and Today’s brands. Del Monte Pacific has a strong market position, with over 85% market share in pineapple solids and about 80% in mixed fruits and tomato sauce. On Nov. 10, First Pacific Co. Ltd. said it would make a $412-million buyout offer for Del Monte Pacific. The company said it would buy 39.72% of Del Monte Pacific from Del Monte Holdings for $163.6 million, or 38.2 cents per Del Monte Pacific share. Following the announcement by First Pacific, Mr. Lorenzo said his family was weighing all options, including exercising its right to match the offer for the Cirio stake. In a statement, San Miguel said that the acquisition of Del Monte Pacific would allow it and NutriAsia to grow their core business as well as further international exposure. "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 [Del Monte Pacific’s] geographical reach," Mr. Campos said in the statement. Eduardo M. Cojuangco, Jr., San Miguel chairman and chief executive officer, said the company is impressed with the success of Del Monte Pacific, and that the firm is a "natural fit" for San Miguel. He added that the partnership with NutriAsia, a company that produces tomato and banana ketchup and other food products, will "aid us in the development of our future strategic marketing efforts as we continue to offer together brands from the Del Monte Pacific, San Miguel and NutriAsia portfolios which then gives us an excellent platform for growth and value creation for both partners."