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URC buys overseas rival for NZ$700M

Posted on July 22, 2014

THE MAIN food and beverage unit of the Gokongwei family has taken over New Zealand’s leading snack food firm for NZ$700 million in a bid to be a “significant regional player.”

In a statement attached to a disclosure, Universal Robina Corp. (URC) yesterday said it was buying 100% of NZ Snack Food Holdings Ltd. (NZFHL), through wholly owned offshore unit URC International Company Ltd., from Pacific Equity Partners (PEP).

URC International will immediately pay NZ$100 million in cash and the remainder upon the closing of the transaction, which will have to be approved by New Zealand’s Overseas Investment Office.

NZFHL is the holding firm of Griffin’s Foods Ltd., the market leader in the New Zealand’s biscuit segment and a major supplier of retailer branded products in Australia. It sells to more than 20 countries and URC, a unit of conglomerate JG Summit, Inc., said it “intends to expand on these export opportunities.”

“We believe Griffin’s is a natural strategic fit to our existing snack foods portfolio given its strong brand heritage in New Zealand -- a country trusted worldwide in having high credibility when it comes to food quality, safety and authenticity,” URC President and Chief Executive Officer Lance Y. Gokongwei was quoted in a separate statement as saying.

URC said the proposed acquisition would “transform” Griffin’s international growth strategy as it will benefit from URC’s existing distribution networks.

“In addition, the acquisition complements URC’s product portfolio, leveraging its distribution strength to sell a premium range of products in its home and international markets,” it said.

URC, which currently has operations in Vietnam, Thailand, Indonesia, Malaysia, Singapore, Hong Kong and China, plans to expand “soon” in emerging markets like Myanmar, Laos and Cambodia.

“The Griffin’s board believes URC’s significant experience in developing its own export markets makes it the ideal partner to take Griffin’s forward as it embarks on this next exciting stage of growth,” Griffin’s Executive Chairman Ron Vela said in the statement.

PEP, Australia’s largest buyout firm, has been taking advantage of booming demand for Australian and New Zealand food suppliers as offshore rivals tap strong demand for quality food to feed Asia’s growing middle class.

“We’re confident the [Griffin’s] growth story will continue under the ownership of [URC], facilitating further growth into ASEAN markets,” PEP Managing Director David Brown said in a statement, referring to the Association of Southeast Asian Nations where Universal has business.

The sale would be the second for PEP during a period of strong interest in makers of high-quality food products needed to satisfy the demand of Asia’s growing middle class.

In May, PEP sold Australian ice-cream maker Peters Food Group Ltd. to Britain’s R&R Ice Cream PLC for a reported A$450 million, doubling its investment in two years.

PEP’s latest sale of Griffin’s -- whose brands of snacks include Eta, Huntley & Palmers and Nice & Natural -- would yield a similar return after having bought the company from France’s Danone SA 2006 for NZ$385 million.

The sale is part of a major asset selldown at PEP, which so far this year has listed cleaner-caterer Spotless Group Ltd. and sanitary products maker Asaleo Care Ltd.

But it is Australasian food assets that have drawn particular international attention in recent months.

In May, China’s Wilmar International Ltd. and Hong Kong’s First Pacific Co. Ltd. agreed to buy baker and dairy company Goodman Fielder Ltd. for A$1.32 billion ($1.24 billion).

In January, Canada’s Saputo Inc. fended off eight other international suitors in a protracted bidding war for control of Warrnambool Cheese and Butter Factory Company Holdings Ltd.

In the same month, China’s state-owned Bright Food Group Co. Ltd..bought yoghurt and cheese maker Mundella Foods for an undisclosed sum, three years after paying A$530 million for 75 percent of Manassen Foods.

Trading in URC shares was suspended yesterday. The shares have gained 40% so far this year compared with a 16% rise in the benchmark PSE Composite Index. -- Daphne J. Magturo and Reuters