TUF suspends preferential public offering over US antitrust probe
Thai Union Frozen Products yesterday abruptly announced the suspension of its preferential public share offering, citing an antitrust investigation by the US Department of Justice (DoJ) over its proposed US$1.51-billion (Bt52.5 billion) acquisition of its
TUF’s shares closed yesterday at Bt18.60, down Bt1.40 or 7 per cent from Wednesday’s closing price.
Only last week, TUF had announced it plan to raise almost Bt13 billion ($380 million) by offering new shares to existing shareholders to finance its planned purchase of Bumble Bee.
TUF confirmed in a statement yesterday that the DoJ is conducting an antitrust investigation of the packaged-seafood industry in the US. Tri-Union Seafoods, a subsidiary of Thai Union, operating in the US under the brand Chicken of the Sea, has received a subpoena requiring the production of relevant information to the DoJ.
"The board of directors of Thai Union believes it is prudent to await additional clarity on this investigation before proceeding with the preferential public offering announced on July 17. We have informed the Office of the Securities and Exchange Commission of the temporary suspension," it said.
"The company has no comment on the investigation at this time, other than that Chicken of the Sea is cooperating fully with the investigation," the statement added.
TUF said investors who have completed their subscriptions to date would get a refund as soon as practicable within the specified period.
"The company may, in its discretion, decide to resume the preferential public offering after further consideration of the situation and consultation with legal adviser."
Thunya Sutavepramochanon, an analyst at UOB Kay Hian Securities (Thailand), told The Nation that the report about the DoJ’s antitrust investigation had prompted the securities house to lower its 2015 profit forecast for TUF by 7 per cent to Bt5.6 billion. The revised earnings will still represent a 10 per cent increase compared to TUF’s earnings last year.
"Previously we had included Bumble Bee into TUF’s fourth-quarter earnings projection but now it seems the deal might not be concluded by this year and thus we are revising down the forecast," she said.
The DoJ report also raises fears of uncertainty over the success of the acquisition plan, said Thunya.
According to a recent Wall Street Journal report, a tie-up of Bumble Bee – the largest producer of shelf-stable seafood in North America – with Chicken of the Sea would create the largest canned-tuna company in the US. Presently, the two companies trail US canned-tuna market leader Starkist Co, owned by South Korea-based Dongwon Industries. In 2013 StarKist had about 36 per cent of the market, followed by Bumble Bee with 25 per cent and Chicken of the Sea with 13 per cent, according to WSJ, which quoted data from Chicago-based market-research firm IRI.
With annual sales exceeding Bt100 billion (US$3.8 billion), TUF is regarded as the world’s largest producer of shelf-stable tuna products.
