Thai Union scraps Bt54-bn deal

The timing of the announcement was somewhat surprising, as it was only two weeks ago that Thai Union chief executive officer Thiraphong Chansiri told reporters that the US Department of Justice was expected to reveal its decision on the proposed deal on December 18.
To address the United States’ anti-trust concerns, he announced that the group would be prepared to sell its US subsidiary Chicken of the Sea International if it were given the go-ahead to purchase Bumble Bee.
Thai Union said in a statement that it had reached an agreement with UK-based private equity firm Lion Capital mutually to terminate the acquisition of Bumble Bee Foods.
Thai Union had announced its planned acquisition of Bumble Bee on December 19, 2014.
Over the course of past 12 months, both Thai Union and Lion Capital “have advocated vigorously the merits of the deal” to the US Justice Department, said Thai Union.
However, in light of the anti-trust investigation initiated by the department into the packaged-seafood industry in the United States, Thai Union and Lion Capital concluded that it was unlikely the deal would get clearance within the time stipulated in the share-purchase agreement.
The US department yesterday issued a statement pointing out that it had “serious concerns” that Thai Union’s proposed transaction would harm competition in the US market.
“Thai Union’s proposed acquisition of Bumble Bee would have combined the second- and third-largest sellers of shelf-stable tuna in the United States in a market long dominated by three major brands, as well as combined the first- and second-largest domestic sellers of other shelf-stable seafood products,” said assistant attorney-general Bill Baer of the department’s Antitrust Division. “Consumers are better off without this deal.
“Our investigation convinced us – and the parties knew or should have known from the get go – that the market is not functioning competitively today, and further consolidation would only make things worse.”
In response to yesterday’s announcement, Greenpeace USA oceans campaigner Kate Melges said Thai Union’s retreat from the Bumble Bee tuna sale was good news for consumers globally.
“Thai Union has been linked to far too many serious labour abuses and destructive fishing practices to be taking on new brands without sorting out its existing problems,” she said.
“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.
“There are also concerns about Bumble Bee’s reliance on destructive fishing practices and cheap labour. Now that the company is back on the market, the brand’s current owner, Lion Capital, should step in without delay to improve the company’s environmental and social performance.
“Without significant improvements to Bumble Bee’s supply chains, to weed out wasteful and destructive fishing, any sale is a risk to investors.”
In July, Thai Union announced a postponement of its plan to increase its capital to acquire Bumble Bee, after the Justice Department began its probe of the US seafoods sector.
Thai Union shares slid 2.63 per cent to close at Bt18.50 yesterday, while the SET Index dropped 0.53 per cent to close at 1,333.57.