Two years after Bumble Bee Foods pleaded guilty to price-fixing, the canned tuna producer is in talks with seafood industry peer FCF Fishery to buy it during a bankruptcy reorganization, according to people with knowledge of the discussions.
Taiwan-based FCF Fishery would act as a stalking-horse bidder in a Chapter 11 reorganization, which San Diego-based Bumble Bee could file as soon as this week, said the people, who asked not to be identified discussing the private deliberations. A stalking-horse bid sets a floor for any other offers that emerge in a court-supervised sale. Talks could still fall apart and terms of any deal could change, they said.
Representatives for the companies declined to comment.
FCF Fishery, which calls itself the largest tuna supplier in the western Pacific, has discussed a bid for about $925 million made up of $275 million of equity and $650 million of debt, one of the people said. The proposal calls for paying down part of Bumble Bee’s existing first-lien debt.
Bumble Bee, the largest North American brand of packaged seafood, is beset with criminal fines and civil lawsuits stemming from a federal price-fixing case. It pleaded guilty in 2017 to conspiring with Starkist Co. and Chicken of the Sea Inc. to fix and raise prices of canned tuna in the United States from 2011 through at least late 2013. The company also agreed to cooperate with the antitrust investigation.
Bumble Bee flagged its financial distress during the case, arguing that the $81.5-million fine initially contemplated could push it into insolvency. The U.S. Department of Justice agreed, cutting the amount to $25 million and giving Bumble Bee an installment plan over several years that required no more than $2 million upfront.
Former Chief Executive Christopher Lischewski pleaded not guilty to related criminal charges in 2018, and his trial in California federal court began Nov. 4. The hearings have featured testimony from cooperating witnesses that include executives from Bumble Bee and its competitors.
Starkist pleaded guilty to the price-fixing charges in 2018 and also agreed to cooperate. Chicken of the Sea, owned by Thai Union Group, received conditional leniency from the U.S. Department of Justice for its cooperation with the investigation and didn’t have to pay fines.
Ronalds-Hannon and Doherty write for Bloomberg.