Thai Union Frozen Products (TUF) is set to become one of the world's biggest seafood companies after agreeing to buy France's MW Brands for €680 million ($884 million) from Trilantic Capital Partners.
The new company will dominate worldwide sales of tuna. MW Brands sells more than €300 million of tuna a year in Europe, mostly in the UK and France under the John West and Petit Navire brands. The company, which booked total sales of €448 million in 2008/09, also has leading market positions in Ireland, the Netherlands and Italy.
TUF is even bigger. Half of its $2 billion of sales in 2009 came from the US, mostly through its Chicken of the Sea brand of canned tuna, which helped it make a profit of $100 million last year. Europe accounted for just 11% of its worldwide sales total in the first quarter, but the addition of the MW Brands portfolio will increase that to more than one-third, according to a statement released by the company.
"MW Brands represents a transformational opportunity for TUF to consolidate its strength in the global ambient seafood market," said Thiraphong Chansiri, president of TUF. "The combination of these two highly complementary businesses will unlock synergies and create a leading global seafood company with broader sources of supply and end-markets."
The all-cash deal is subject to shareholder approval and an anti-trust review from the relevant authorities. If it goes through, TUF will have the capacity to process half a million tonnes of tuna a year and will become one of the few seafood companies worldwide with sales, production and leading brands across Asia, the US and Europe.
The investment will add processing plants in France, Portugal, the Seychelles and Ghana, to its existing processing facilities in Thailand, Indonesia, Vietnam and the US. The company's fishing fleet will grow in the same way -- to nine vessels from its existing four.
"In addition to diversification of our end-market and production bases, MW Brands' strong European footprint will also provide us with further business opportunities in the future through a strong customer base, distribution, and brand leadership," said Thiraphong.
Trilantic Capital, the former private equity arm of Lehman Brothers, has been trying to sell MW Brands since earlier this year after originally acquiring the company as part of a carve-out of businesses from HJ Heinz in 2006.
"We are proud to have been involved with MW Brands from its inception as a carve-out of various businesses from Heinz to becoming the leading European canned seafood company," said Joe Cohen, a partner at Trilantic Capital. "TUF represents an excellent buyer of the business and the combined company will be able to generate important synergies through procurement, new product development and global sales. The combination also constitutes a key step in the development of sustainable and economic fishery production."
Morgan Stanley and Bualuang Securities acted as financial advisers to TUF, while UBS advised Trilantic Capital Partners.