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Business deals

Del Monte Philippines to sell its 13% stake to Singapore investor

Food processor expects to grow fruit sales in China after $130m deal

Del Monte Philippines produces and sells food and beverages in the Philippines under the Del Monte brand and exports them under the S&W brand.   © Reuters

CEBU, Philippines -- Del Monte Philippines, a wholly owned subsidiary of global food and beverage company Del Monte Pacific, has recently announced plans to sell 13% of its ordinary shares to Singapore-incorporated SEA Diner Holdings for $130 million.

The proposed share sale comes more than a year after Del Monte Philippines shelved its planned initial public offering, which the company hoped would raise up to $324 million, due to "adverse market conditions."

In a disclosure, Singapore-listed Del Monte Pacific said that it has entered into an agreement with SEA Diner for the proposed sale of about 363.7 million ordinary shares of its Philippines subsidiary, subject to certain conditions.

The net cash proceeds of approximately 155.5 million Singapore dollars ($115 million) will be used to pay down Del Monte Pacific debt.

SEA Diner is focused on investing in companies in the consumer sector in China and Southeast Asia. Together with its affiliates, the company has invested over $1 billion in ASEAN and Chinese consumer businesses to date, including consumer product and technology companies.

Del Monte Philippines is engaged in the production and sale of food and beverage products -- including fruit juices and juice drinks, packaged pineapple and mixed fruit, spaghetti sauces and culinary mixes -- in the Philippines under the Del Monte brand. It exports products under the S&W brand.

It also operates one of the world's largest fully integrated pineapple operations and has been growing and processing pineapples for more than 90 years.

Del Monte Pacific said having SEA Diner as an investor will help its Philippine unit expand its fresh fruit sales in China, where SEA Diner has close relationships with online and offline food retailers, among other benefits.

The funds raised in the proposed share sale will also allow Del Monte Pacific to free up credit lines to pursue other opportunities, after the proposed public offering of its Philippine subsidiary was deferred.

In February 2018, Del Monte Pacific announced plans to list shares of Del Monte Philippines on the Philippine Stock Exchange. The plan was to offer about 559.5 million shares to raise up to 16.7 billion Philippine pesos, or about $324 million.

But in June that year it announced it would defer the public offering due to "adverse market conditions" and would only proceed when market conditions improved.

"As market conditions have yet to improve, no further action has been taken by the company in relation to the proposed public offering," Del Monte Pacific said in its disclosure.

The company's board later decided to explore the possibility of partnering with an investor to enhance value in Del Monte Philippines through a private placement, the disclosure added.

DealStreetAsia is a financial news site based in Singapore focused on corporate investment activity in Southeast Asia and India. Nikkei recently acquired a majority stake in the company.

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