Sector News

Canned tuna giant Thai Union Frozen plans to buy Norway’s seafood firm King Oscar

September 15, 2014
Food & Drink
(Reuters) – Thai Union Frozen Products Pcl said on Monday it would buy Norwegian seafood firm King Oscar for an undisclosed amount, the latest acquisition by the world’s largest producer of canned tuna as it seeks to boost revenue.
Like other major Thai companies, Thai Union Frozen is aggressively buying assets overseas to prime itself for the surge in demand expected after the formation of a single Southeast Asian market next year, which would create a $2 trillion combined economy.
Thai companies are also going abroad to offset slowing growth at home as years of political instability keep a lid on consumption. So far this year, Thai firms have announced more than $1.7 billion in overseas M&A deals, on top of the record high $25 billion in deals they said they would make in 2012. M&A activity slowed down in 2013 due to political unrest.
The King Oscar deal comes a few weeks after Thai Union Frozen said its MW Brands subsidiary had signed a deal to buy French smoked salmon maker MerAlliance, also for an undisclosed sum.
Thai Union Frozen, which makes “Chicken of the Sea” brand tuna, wants to increase sales to $8 billion by 2020, mainly through overseas acquisitions. The company has targeted $5 billion in sales next year, up from an expected $4 billion in 2014.
Privately owned King Oscar is one of the world’s biggest suppliers of canned fish, with sales worth $80 million and an EBITDA margin of around 12 percent in 2013.
Thiraphong Chansiri, Thai Union Frozen president and chief executive, called the deal “highly strategic”. Analysts said they expected the company would buy more seafood-related assets.
“We believe, in developed markets, TUF will continue to focus on acquiring brands and established distribution networks to leverage its European brands. We expect more M&A deals to be a positive catalyst for earnings growth.” Best Waiyanont, a Macquarie analyst, wrote in a research note.
King Oscar has two production facilities in Poland and Norway with a total combined capacity of 135 million cans. Its premium-quality sardines are bestsellers in Norway, the United States and Australia.
The deal is subject to regulatory approvals which are expected in the fourth quarter of 2014.
Media reports have said that Thai Union Frozen is also looking to buy Bumble Bee Foods, the largest canned tuna and sardines producer in North America, but the Thai firm has repeatedly declined to comment on such reports.
Thai Union Frozen counts Wal-Mart Stores Inc and Costco Wholesale Corp among its clients.
The company had cash and cash equivalents of 8.4 billion baht ($260 million) at the end of second quarter, when its net debt to equity ratio was at 0.80, according to its financial statement.
The King Oscar deal increases the number of outbound Thai M&A deals announced so far this year to 32 deals, with a combined value of $1.76 billion, compared to 28 deals with a value of $233 million in 2013, according to Thomson Reuters data. ($1 = 32.2500 Thai baht) 
By Khettiya Jittapong (Additional reporting by Saeed Azhar in SINGAPORE; Editing by Miral

Related News

September 21, 2020

Alpro announces 30m euro investment and new sustainability goals

Food & Drink

Alpro has unveiled a new five-year health and sustainability action plan, as well as plans to invest €30m in two of its production sites. The objectives laid out by the company, […]

September 18, 2020

Cargill to advance regenerative agriculture practices across 10m acres of farmland

Food & Drink

Cargill has announced that it is supporting farmer-led efforts to adopt regenerative agriculture practices on 10 million acres of crop land in North America by 2030. The initiative will focus primarily […]

September 17, 2020

PepsiCo pilots invisible digital watermark technology to boost recycling

Food & Drink

PepsiCo is trialling products encoded with invisible digital watermarks for more effective recycling. The technology is pegged as the “holy grail” that will make mechanical sorting more efficient. The beverage […]