Century Pacific Food Inc. (CNPF), producer of Century Tuna and 555 sardines, has finally signed the deal to acquire its sister firm, cementing its entry into the coconut beverage market.
In a disclosure to the Philippine Stock Exchange, CNPF said it has signed a share purchase agreement to own 100 percent equity in Century Pacific Agricultural Ventures, Inc. (CPAVI).
CPAVI is an integrated coconut producer within the Century Pacific Group, which produces organic-certified and conventional coconut water, desiccated coconuts, and virgin coconut oil for both export and domestic markets.
In October, CNPF announced its move to buyout CPAVI for P4.5 billion, half to be funded by cash and the rest from the issuance of new shares.
In particular, the P2.25 billion portion will be sourced from existing cash and bank loans. The balance will come from the sale of 128.2 million CNPF primary shares at P17.55 each.
The share price is equivalent to a 4.41-percent premium from the company’s 30-day volume weighted average price of P16.81 per share as of October 26, and 3.85 percent higher than the closing price of P16.90 per share as of the same day.
CPAVI is expected to contribute 7 percent to 8 percent of CNPF’s revenues in 2016, and to improve the company’s consolidated net profit margins.
Evercore Asia Limited was tapped as the financial advisor for the transaction, while Cayetano Sebastian Ata Dado & Cruz Law Offices is appointed to conduct legal due diligence, and BDO Capital & Investment Corp. to provide a third party fairness opinion.
The CPAVI buyout is in line with the company’s priority to cement itself as a leading player in growing food markets.
CNPF said it is one of the global food companies which have an increased appetite for acquisition targets in this higher growth, health-conscious, and organic product categories.
“The global trend towards 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 earlier 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,” he added.
Established in August 2012, CPAVI operates an integrated coconut facility, whose primary products are organic-certified, and conventional coconut water, desiccated coconuts, and virgin coconut oil.
The 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.
Its products are certified by local and international agencies including GMP, HACCP, BRC, Halal and Kosher, also securing organic certification from various markets such as the US, European Union, Korea and Canada.
CNPF is trying to grow its sales and profits by “10 percent to 15 percent yearly” in the next two to three years on the back of growing market consumption amid slow inflation and acceleration of gross domestic product to boost the firm’s branded products.
In the first nine months of 2015, CNPF saw net income improved by 22 percent to P1.5 billion as revenues also went up to P17.2 billion from P15.2 billion a year ago.
The company manufactures household brands such as Century Tuna, 555, Blue Bay, and Fresca for canned tuna products; Argentina, Swift, Shanghai, Wow Ulam and Lucky 7 for canned meat products; Angel and Birch Tree for canned milk and dairy mixes; Kaffe de Oro for coffee mixes; and Home Pride brand for the flavor mixes.
Incorporated in 2013, CNPF is engaged in manufacturing canned and processed fish, canned meat, dairy and mixes and exporting tuna under the Po family’s umbrella conglomerate Century Pacific Group Inc., formerly Century Canning Corp.