BANGKOK -- Thai Union Group, the world's largest processor of canned tuna, aims to add $1.4 billion in sales by means of mergers and acquisitions in the five years through 2020. The company tallied $3.7 billion in 2015.
"We are in the process of identifying some pet care-related M&A activities," Chief Financial Officer Joerg Ayrle told an investors conference in Bangkok on Monday. He added that the company should be careful not to overpay for such deals, since the "market valuation [for pet care companies] is extremely high."
Thai Union's pet care segment in the January-March quarter logged a gross profit margin of 22.8%, higher than the 18.5% for seafood kept at ambient temperature and 9.5% for chilled seafood. This explains the company's interest in expanding the pet business.
When it comes to seafood, Thai Union is looking at acquisitions in markets where it has a relatively weak presence. Currently, the company is heavily dependent on the U.S., Europe and Japan, which account for 80% of group revenue. The CFO said it is eyeing opportunities in Asia.
Ayrle declined to give an exact investment figure but said the acquisition funding would be kept to cash flow and debt. He stressed that Thai Union is "not looking at very, very large acquisitions" and has a "very strong balance sheet to support the M&A in the pipeline."
In addition to the $1.4 billion boost through acquisitions, Thai Union's five-year growth strategy calls for another $2.9 billion organic increase in sales. That would push the total to $8 billion in 2020.