LISTED tuna canner Century Pacific Food Inc. (CNPF) on Tuesday said it will fold the integrated coconut producer of the Po family into the company, as it ventures into other growth areas to increase its “share of the stomach” products.
The company said in its disclosure to the Philippine Stock Exchange that it has bought the entire Century Pacific Agricultural Ventures Inc. (CPAVI) from the Po family’s holding firm Century Pacific Group Inc. It said it will buy the coconut producer for P4.5 billion, a “meaningful” discount on the value of the company, which has products that include coconut water, desiccated coconuts and virgin coconut oil for export.
“Capitalizing on global health and wellness trends, CPAVI is expected to bring long-term strategic benefits and an additional avenue of growth for CNPF,” the company said, adding that the company will add some 7 percent to 8 percent to its income in 2016.
Funding for the transaction will be 50-percent cash and 50-percent new shares. CNPF will issue 128.2 million primary shares at a price of P17.55 apiece, equivalent to a 4.41-percent premium based on its 30-day volume weighted average price of P16.81 per share as of October 26.
The balance of P2.25 billion will be sourced from existing cash and bank borrowings, the company said.
As of the third quarter, Century Pacific Group owned 72.2 percent of CNPF. After folding the coconut producer into CNPF, the stake of its parent firm will increase to 73.7 percent.
“This acquisition is in line with CNPF’s priority to cement itself as a leading player in growing food markets. CPAVI’s operations fits into CNPF’s core business, complementing its product portfolio by increasing the combined CNPF’s combined share of stomach and leveraging on existing capabilities in the manufacture of low acid products,” it said.
Evercore Asia Ltd. was the company’s financial advisor on the deal. Cayetano Sebastian Ata Dado and Cruz Law Offices conducted legal due diligence. BDO Capital and Investment Corp. provided a third- party fairness opinion.
The Po family’s coconut firm was established in August 2012. Its main products—coconut water and virgin coconut oil—are sold to global brands and retailers in their respective categories. Other current products include copra, coco meal and coco shells, which are sold to the domestic market. It also has other coconut-based products under development.
“The global trend toward healthy and organic coconut products is growing rapidly in developed economies, like the US and Europe. This is an area where Philippine industry has an advantage and can be globally competitive,” CNPF President Christopher Po said. “We think this new business will be a great addition to Century Pacific Food Inc.’s portfolio, and another leg to sustain and drive the company’s future growth.”