H. J. Heinz to Buy Bumble Bee Seafoods

H. J. Heinz Co. of Pittsburgh, whose Star-Kist Tuna unit is the largest-selling U.S. brand of canned tuna, has agreed to buy San Diego-based Bumble Bee Seafoods, the nation’s third-largest canned tuna producer.

Terms of the acquisition, which will require regulatory approval because of antitrust considerations, were not disclosed. The selling group includes four Bumble Bee executives and financial partner First Boston Corp., which led a $73-million leveraged buyout of the seafood company from former parent Castle & Cooke in 1985. Heinz said it will retain the Bumble Bee trademark and will continue to market the brand separately.

Bumble Bee’s worldwide sales were an estimated $200 million in 1984. President Patrick Rose and other Bumble Bee executives were not available to comment on recent sales figures.

Symptomatic of the problems U.S. tuna canners have had competing against foreign companies, Bumble Bee closed its San Diego processing plant in 1982, resulting in 900 layoffs. At the time of the closure, Castle & Cooke cited high labor costs for the shutdown. The huge plant, located on San Diego’s harbor front, is now occupied by a ship repair company.

Bumble Bee’s principal tuna processing plant is in Mayaguez, Puerto Rico, where 2,100 of the company’s 2,500 employees work. The Puerto Rico plant, which had been leased by Bumble Bee from Castle & Cooke, will be purchased by Heinz as part of the merger. Bumble Bee also operates a smaller canning plant in Ecuador.

San Diego’s other large tuna canning plant, operated by Ralston Purina’s Chicken of the Sea unit, was closed in 1984. Ralston Purina has been trying unsuccessfully to sell the building ever since, San Diego port district official Don Hillman said Thursday.

American canners have suffered in competition with producers in countries such as Thailand, where workers are paid 35 cents to 40 cents per hour, Heinz Assistant Treasurer John Mazur said Thursday. “We pay in the dollars” per hour at Heinz plants in Puerto Rico and Samoa, Mazur said.

Star-Kist, which is headquartered in Long Beach, operates its main tuna canning plant on a site directly adjacent to Bumble Bee’s in Puerto Rico, Mazur said.

Star-Kist controls about 40% of the $1.4-billion canned tuna market in the United States, said Nomi Ghez, an analyst with Goldman Sachs of New York. Ralston Purina’s Chicken of the Sea controls an estimated 20% of the U.S. market and Bumble Bee about 6%, Ghez said.

Ghez said Heinz’s acquisition may encounter opposition from government antitrust regulators because the deal “is clearly a case where the market leader intends to buy out one of its competitors.”

Heinz’s Mazur disagreed. “Tuna is now a worldwide commodity, with low barriers to entry and with imports a significant factor (in the U.S. market). We don’t feel a merger would result in anti-competitive barriers,” he said.