Thai Union takes stake in Red Lobster
THAI UNION Group, one of the world’s largest seafood companies, has purchased a minority stake in Red Lobster Seafood Co, the world’s largest seafood-restaurant company, in a deal worth US$575 million (Bt20.3 billion) as part of its strategic expansion in
Thiraphong Chansiri, chief executive officer of Thai Union, said yesterday the move would pave the way for the company to learn more about the restaurant business and restaurant management. The acquisition fits well with the company’s strategy to continue to expand into areas related to its core seafood business.
He said the company expected to take two to three years to gain more insight into this business.
Red Lobster, which is headquartered in Orlando, Florida, has 58,000 employees in more than 700 restaurants in the United States and Canada, and a growing international footprint, including 24 branches in Japan and seven in Malaysia.
Thai Union has supplied seafood to Red Lobster for more than two decades.
In the 12 months to August 2016, Red Lobster generated sales of $2.479 billion.
Of TU’s total investment in this deal, $230 million was spent on acquiring 25 per cent of the shares of Red Lobster held by its former 100-per-cent owner Golden Gate Capital, a San Francisco-based private-equity investment firm.
Another $345 million was spent purchasing convertible preferred units in Red Lobster from Golden Gate, which resulted in Thai Union acquiring another 24 per cent of Red Lobster. With this part of the deal, TU has an option either to redeem these convertible units at the agreed amount or convert them into common units at any time before the end of the 10-year tenure.
Golden Gate remains the majority owner and retains operational control of Red Lobster.
“This investment marks a strategic step to build Thai Union’s direct-to-consumer channel, and will enable us to benefit from the extensive restaurant-industry expertise of both the Red Lobster management team and Golden Gate,” Thiraphong said.
Thai Union owns a number of global seafood brands, including Chicken of the Sea, King Oscar, John West and Petit Navire.
He said the acquisition of a stake in Red Lobster was TU’s biggest deal this year. Before the Red Lobster deal, this year TU had spent about $73 million on business expansion.
Thai Union obtained six-month bridge loans totalling more than Bt20 billion from Bangkok Bank, Siam Commercial Bank and Bank of Ayudhya to fund the Red Lobster deal.
The company is considering issuing debentures and seeking long-term bank loans this year to refinance the bridge loans.
