Pillsbury to Sell Bumble Bee Unit to Thai Firm
Pillsbury announced a definitive agreement Wednesday to sell its Bumble Bee Seafoods subsidiary to Unicord Co. of Thailand for $269 million in cash. The deal marks the second sale of a major U.S. tuna canning operation to Far Eastern interests over the past year and another step in Pillsbury’s divestiture program.
Last November, Ralston Purina sold its Chicken of the Sea tuna company to PT Mantrust of Indonesia for $260 million. The acquisitions by offshore producers, analysts said, reflect the food industry’s increasing concerns about costs.
“The food business is consolidating on a worldwide basis and there is a lot of production in the Far East. It’s a labor intensive business and labor costs are low there,” said Nomi Ghez, an analyst with Goldman, Sachs & Co. in New York.
San Diego-based Bumble Bee is the No. 3 tuna company in the United States with sales last year of $284 million, a 17% share of the $1.7-billion domestic tuna market, said Lloyd Greif, an executive vice president of corporate finance at Sutro & Co. in Los Angeles. Greif’s firm represented Unicord in the transaction.
The leading tuna brand in the United States is H. J. Heinz’s Star-Kist, with a 36% market share, followed by Chicken of the Sea with 19%.
Second Sale in Week
Word of the Bumble Bee sale came less than a week after Pillsbury announced the sale of its Van de Kamp frozen seafood operation, also based in San Diego, to Whitman Corp. of Chicago for about $140 million.
The two sales are part of the strategy of Pillsbury’s parent, Grand Metropolitan of Great Britain, to spin off what it sees as Pillsbury’s peripheral businesses. Grand Metropolitan, which acquired Pillsbury in January for $5.7 billion, had announced in May that it intended to sell the seafood companies.
Earlier this year, Grand Metropolitan announced deals to sell Pillsbury’s Steak & Ale and Bennigan’s restaurant chains, its grain merchandising operation and its Azteca Mexican food business. In addition, Pillsbury has laid off a total of 500 workers at its Minneapolis headquarters and at its Burger King operation.
Unicord, a food processing and exporting conglomerate based in Bangkok, said it plans no layoffs and that it will retain current Bumble Bee management. Bumble Bee employs 100 at its headquarters in San Diego, 2,400 at its principal canning plant in Mayaguez, Puerto Rico, and 250 at a plant in Ecuador.
Unicord also disclosed plans to open a 110,000-square-foot Bumble Bee canning plant at Santa Fe Springs in southeastern Los Angeles County that it is acquiring as part of the transaction. The plant will open within six months and employ about 100, Greif said.
The purchase will tighten the existing link between Bumble Bee and Unicord, whose plants in Thailand already supply canned tuna to Bumble Bee. Greif said Unicord expects to benefit by locking in Bumble Bee as a U.S. distributor of its tuna.
Unicord’s purchase of Bumble Bee is believed to be the largest ever of a U.S. corporation by a Thai concern. Unicord’s chief executive and largest shareholder is 38-year-old Dumri Konuntakiet. The company also has interests in shrimp and oyster farming.
Pillsbury acquired Bumble Bee last year for $242 million from a group consisting of four Bumble Bee executives and financial partner First Boston Corp., an investment bank. The sellers had engineered a management buyout of the tuna canner in 1985 from former parent Castle & Cooke for about $60 million, sources said.
Paying Higher Multiples
Pillsbury announced its purchase in July, 1988, less than a week after a Star-Kist deal to buy Bumble Bee was disallowed by the U.S. government on antitrust grounds.
“Pillsbury is getting a higher price than it paid (last year), and it’s hard to believe the tuna business has boomed since then. It’s just a reflection that food companies are getting higher and higher multiples these days,” said Ghez of Goldman Sachs.
