TU share price down on foiled takeover deal
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Thai Union Group (TU), the world's largest canned tuna exporter, has witnessed a 2.63 per cent drop in share price today as its bid to take over US-based Bumble Bee Foods (Bumble Bee Seafoods) was terminated.
At 4.21pm, the company was traded at Bt18.50, down by Bt0.50 from yesterday closing.
The share price declined though the company insisted that such termination would have no effect on the operation and the company's commitment towards strong footprint in the North American seafood market.
TU today announced that its planned 100 acquisition of the US company from Lion Capital was unlikely to win the US Department of Justice's approval "under the time stipulated in the Share Purchase Agreement)".
In its research note dated October 6, Bualuang Securities said: "We believe that the DOJ's wider probe into the packaged seafood industry, including price controls, will further delay its review into the Bumble Bee deal."
If the deal flops, the securities company expected TU to launch new acquisition deals (worth $200-$500 million each) to replace the big deal in the first half of next year.
December 18 is the deadline for closing the agreement with Lion Capital.
The Thai company announced the US$1.5 billion takeover plan on December 19, 2014. Since then, the deal has spurred fears of market dominance which could lead to unreasonable pricing in the canned tuna market.
TU owns "Chicken of the Sea" brand. With 100 per cent ownership in Bumble Bee, its market share in the US is expected to exceed 50 per cent.
Greenpeace, which has alleged TU of labour abuses in the supply chain, welcomed the termination.
"It is high time Thai Union cleans up its supply chains and uses its huge purchasing power to stamp out labour abuses and destructive fishing from the Thai fishing industry," said Greenpeace USA Oceans Campaigner Kate Melges.
“If Thai Union is committed to the North American market as it claims to be, it needs to ensure it is supplying consumers with a better product than Chicken of the Sea, which is also currently implicated in Thai Union’s tainted supply chains.”
