Thai food giant to acquire US producer Bellisio for $1.5b

BANGKOK • Thailand's Charoen Pokphand Foods (CPF) said it will acquire US frozen-food producer Bellisio Parent for US$1.075 billion (S$1.52 billion), paving the way for its entry into the world's largest food market.

The acquisition is in line with CPF's strategy to expand into high-potential markets, chief executive officer Adirek Sripratak said in a statement.

CPF, controlled by Thailand's richest man Dhanin Chearavanont, signed a purchase agreement yesterday with seller Bellisio Consolidated Equity, and planned to use internal cash to finance the acquisition, the statement said.

The deal is the first step for the company's foray into the world's largest food market, creating an opportunity to bring more Asian products to US consumers and to export them globally.

The purchase will be funded by group cash flows, according to the statement. CPF shares plunged as much as 5.2 per cent to a five-week low on concerns that the deal may be too expensive and could affect the company's financial position.

The company had cash or cash equivalent of 43 billion baht (S$1.7 billion) at end-September, according to its financial statement.

CPF, Thailand's largest meat and feed producer with operations in 14 countries, has said it planned to expand its offerings with more value-added products to serve rising demand in new markets.

Bellisio group reported net sales of US$668 million for the year ended Sept 11.

The transaction, subject to customary closing conditions and regulatory approvals, is expected to be completed within 180 days, and will enable CPF to gain access to the North American market, it said.

"The question will be how expensive is the price paid for the acquisition," Mr Warut Siwasariyanon, head of research at Asia Wealth Securities, told Bloomberg.com.

"The possibility of higher debt to finance it would put pressure on earnings."

Bellisio group is the third-largest producer of single-serve frozen entrees in the United States by unit share with well-known brands such as Michelina's, Boston Market, Chili's, and Atkins.

The US firm, which launched operations in 1990, has four facilities located in Ohio, California and Minnesota. It leads the single-serve frozen entrees market in Canada.

Mr Joel Conner, chairman and CEO of Bellisio group, said that the deal should boost growth for Bellisio and support CPF's vision of being the "kitchen of the world", according to Reuters.

CPF, the flagship business of Thailand's largest agribusiness conglomerate Charoen Pokphand Group, has been looking to buy assets overseas to boost growth and offset a slowdown at home.

Last month, Chai Tai (China) Investment, an indirect subsidiary of CPF, acquired a 70 per cent stake in China's animal feed producer and chicken meat processor, Fujian Sumpo Foods Holding, for 1.7 billion baht, as part of its business expansion in China.

A version of this article appeared in the print edition of The Straits Times on November 18, 2016, with the headline 'Thai food giant to acquire US producer Bellisio for $1.5b'. Print Edition | Subscribe