Thai Union Frozen Products Public Company Limited (TUF), the world’s largest producer of shelf-stable tuna products and a major supplier of frozen shrimp, announced on December 19 that it has entered into a binding agreement to acquire 100% of the shares of Bumble Bee Seafoods. The San Diego, California-based company, North America’s largest branded shelf-stable seafood company, is being bought for US $1.51 billion from Lion Capital, a private equity firm.
Bringing Bumble Bee into its fold will allow Thai Union to further improve operating efficiencies in the areas of raw material sourcing and production, as well as facilitate advances in innovation and new product development, particularly in North American markets.
“The deal is the largest acquisition in the history of our company and one of the most exciting external growth propositions. Upon completion, the transaction will be immediately accretive to our earnings and cash flows and will increase revenues by approximately 25%,” said Thiraphong Chansiri, president and chief executive officer of Bangkok-based TUF. “Combining the business with Thai Union Group will lower costs, improve efficiency, and create the global leader in the shelf-stable seafood space.”
With Thai Union’s acquisition of Bumble Bee Seafoods, President and CEO Thiraphong Chansiri is confident that company sales will top $5 billion in 2015.
TUF, already regarded as the world’s foremost producer of canned tuna products, rang up sales topping $3.6 billion last year. The company, which employs more than 35,000 worldwide, expects to boost revenues to $5 billion in 2015. Its goal is to hit $8 billion in sales by 2020.
Thai Union, which has been present in the United States for over 17 years, acquired 100% of the Chicken of the Sea International in 2006. Like Bumble Bee, it too is a major player in the US canned tuna market. Once the purchase from Lion Capital is finalized, it is estimated that TUF will command 38% of the American market. Combined sales will put it ahead of the iconic StarKist brand, owned Dongwon Industries of South Korea.
The Bumble Bee acquisition is another sign of Thai Union’s continued commitment to the second largest seafood market in the world, noted Shue Wing Chan, chief executive officer of Chicken of the Sea International.
“As a strategic investor with a long-term view of the market, we believe that, together, we will be able to reinvigorate the canned seafood category in North America,” he commented.
Bumble Bee Seafoods generates annual sales of approximately $1 billion and is expected to post earnings before interest, taxes and amortization (EBITA) of about $145 million in 2014. The company has a workforce of more than 1,300 people producing and selling canned, pouched and frozen seafood across the United States and Canada. While canned tuna is by far its mainstay, other products offered include red salmon, sardines, clams, crabmeat and oysters.
Welcoming the acquisition, Chris Lischewski, president and chief executive officer of Bumble Bee Seafoods, stated: “I have always believed that Thai Union and Bumble Bee Seafoods represented a natural combination, given the synergies that exist between our organizations. We share a strong vision towards innovation, operational excellence, sustainability and value for our consumers, which is one of the many reasons this combination is good news for our customers, consumers and the industry as a whole.”
The sale remains subject to clearance by United States antitrust authorities and other closing conditions set forth in the acquisition agreement. While a definitive closing date cannot yet be determined, both parties expect that the it will occur during the second half of 2015.
