PHILIPPINES’ CAMPOS GROUP BUYS U.S. DEL MONTE CORP, NEW INVESTING HISTORY BEGINS

PHILIPPINES’ CAMPOS GROUP BUYS U.S. DEL MONTE CORP, NEW INVESTING HISTORY BEGINS

 

Erle Frayne D. Argonza

 

Good day to you, global citizens!

 

For the good news coming from Asia: the Philippines’ Campos group, majority owner of NutriAsia, just bought the Del Monte Pacific Ltd., a US-based company that has been operating a large subsidiary in the Philippines. This is a milestone event for Filipino business investments in the USA, which could be followed up by other Philippine-based conglomerates buying into other American-owned big businesses inside the USA.

 

This experience isn’t exactly precedent setting. Couples of years ago, the San Miguel Corporation, PH’s largest Food & Beverage conglomerate, bought the NatFood of Australia. NatFood is Australia’s biggest F&B firm by the way, so that negotiation marks a precedence to show the maturity and advanced systems of economic enterprises constituted in the Philippines.

 

Though it isn’t precedent-setting on a regional-global setting, it is milestone for U.S. engagements by Filipino businessmen & entrepreneurs. Since F&B companies in the Philippines have attained a maturity and advanced development, expect the purchase by other Filipino F&B giants, such as Jollibee Group, of large F&B companies owned by American business tycoons.

 

It may not be long when the big realty mall-makers of the Philippines will set foot in the USA. SM Group, Gokongwei Group, and Ayala Group are the top players so far, besides being recognized as among Asia’s topguns in the terrain of mall-making. Not only do these conglomerates make big malls, they also produce architectural marvels that are among the world’s top mall architectural wonders.

 

I would credit the maturation of the Filipino companies to good measures of corporate governance, update organizational culture, and best practices put into place across the decades. Re-engineered to pass the test of time and resilience, the same Filipino firms have become global and have invested in other regions and continents as well.

 

It is merely the ‘planting season’ for Filipino investments overseas as of the moment. At a certain juncture in the foreseeable future, when the pattern attains maturity, the repatriation of profits from such business concerns to the Philippines will exceed those of remittances from overseas workers. I’ve been forecasting this trend since the start of the new millennium yet, and I’m optimistic of its coming to fruition timed with the maturation of the Philippine economy to a 1^st world rich economy by the latter part of next decade.

 

[Manila, 19 October 2013]

 

Source: http://www.philstar.com/business/2013/10/12/1244140/campos-firm-buys-del-monte-us-1.7-b

Campos firm buys Del Monte US for $1.7 B

By Neil Jerome C. Morales (The Philippine Star) | Updated October 12, 2013 – 12:00am

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MANILA, Philippines – Del Monte Pacific Ltd. (DMPL), majority owned by the NutriAsia Group of Campos family, is buying the consumer food business of US-based Del Monte Foods (DMF) for nearly $1.7 billion.

The move will give DMPL access to the profitable US and South American markets while boosting its net sales by around $1.8 billion, the company said in a disclosure to the Philippine Stock Exchange.

The Singapore and Philippine-listed DMPL said it entered into a definitive agreement for subsidiary Del Monte Foods Consumer Products Inc. to acquire privately-owned DMF for $1.675 billion.

“This landmark transaction offers DMPL greater access to a well-established, attractive and profitable branded consumer food business in the world’s biggest market,” said DMPL chairman Rolando Gapud.

“Prior to this acquisition, the US was one of few key markets where our company did not have a direct presence nor have its own brands,” Gapud said.

Shares of DMPL in the local bourse surged to as much as P39.50 yesterday before closing 11.11 percent higher at P30 apiece from P27 on Thursday.

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DMF owns the Del Monte brand rights for processed food products in the US and South America. Its consumer business has a strong portfolio of leading brands, with seasoned employees, healthy cash flows and $1.8 billion in sales in the fiscal year that ended last April.

DMF owns the iconic Del Monte brand, along with Contadina, S&W and College Inn brands. The company claims to  be number one in major canned fruit and vegetable categories in th US and top two in canned tomato and broth categories.

“This leading branded market position in the canned fruit and vegetable segments provides DMPL with significant scale and reach and, the company believes, an opportunity to unlock meaningful potential synergies,” the firm said.

Under the agreement, DMPL will buy the brands and certain assets and liabilities of DMF, including equity interests in certain South American subsidiaries.

DMPL said it will finance the acquisition through a combination of $745 million of equity in the new acquisition subsidiary as well as $390 million in long-term debt financing from BDO Capital and Investment Corp. and Bank of the Philippine Islands.

“As part of the equity financing, the company plans to issue common and preferred shares in the market,” DMPL said, adding that the acquisition will be finalized not later than the first quarter next year.

Moving forward, DMPL plans to launch new product offerings to the US catering to the growing Hispanic and AsianAmerican markets.

“The company expects to generate significant value creation opportunities in the US market through the expansion of DMF’s current product offering to include beverage and culinary products,” Gapud said. 

DMF’s consumer food business is also an attractive platform to offer certain products appealing to the large Hispanic and Asian American population in the US, he added.

DMPL’s 23,000-hectare plantation in Mindanao is the world’s largest fully integrated pineapple operation with a 750,000-metric ton processing capacity. It was set up in 1926 by the US government because of the widespread pineapple disease in Hawaii.

DMPL produces, markets and distributes food, beverages and related products in the Asia-Pacific region and the Indian subcontinent, and has supply deals with Del Monte Pacific trademark owners and licensees around the world.

In the first half, DMPL’s sales gained 14 percent to $208.4 million while net income inched up two percent to $10.6 million.

DMPL’s principal shareholder NutriAsia leads the Philippine market for condiments (Datu Puti and UFC), specialty sauces (Jufran and Mang Tomas) and cooking oil (Golden Fiesta).

NY STOCKS LOSES TOTAL $3 TRILLIONS, AND STILL GOING DOWN

Erle Frayne Argonza

Since the stock markets began to plunge late last year, downturns that began with the implosion of the housing subprime mortgage bubble, over 2000 points were already shaved off from the Dow Jones index, the prime index of the USA’s stock markets. It’s now down to nearly 11,000 points from its best time total of 13,000+ points last year, representing actually a 20% plunge.

Each point in the Down Jones is worth $1 Billion as the roughest minimum estimate, though this may range up to $1.5 Billion, depending on the season of trading. Using the minimum as the yardstick, a 20% plunge from a total of 13,000+ index represents at least $2 Trillion worth of loses. If we were to add the loses in the other indices notably the Nasdaq, the figure can get us up to $3 Trillions loses.

Do note that the figure of $3 Trillions is only a conservative estimate. If we use the same figure to compute for the Global Portfolio loses, and multiply this with the number 6 (US’ portfolio capital flows represent 16% or 1/6 of total global flows, using BIS index), the operation would yield a total of $18 Trillions worth of portfolio investments gone down the drain.

It should be stressed that those loses are now gone forever. The stock market investors should better think of other options at this moment, since the plunge hasn’t ceased yet. Those loses of theirs will not return, rest assured. The plunge, per my forecast, will take a long time going yet till middle of next year.

The alarm bells are now up for a total global financial meltdown, and so every concerned fellow of the planet must make necessary preparations for the worst, whatever the worst could be. Corporate social responsibility or CSR may now need to do some contingency re-assessment and re-adjustment of goals and strategies, in the light of the continuing plunge.

Likewise should states rethink their goals and options, recheck their fiscal situation and re-adjust targets accordingly. There has been so much knee-jerked reactions by state players, central banks included, that must be re-examined, including pumping too much liquidities, rescuing ailing or bankrupt banks the erroneous way, and re-allocating budgets for populist welfare subsidies that would, in the short run, only lead to serious fiscal problems in the short run.

What is surfacing much clearly is that the old tools being applied—to salve the crisis—don’t seem to work as much as expected. The search for sound options is a tough challenging one, and the expectations from consumers, who have already slowed down consumption generally, are intensifying. Let us watch out for more contingent events.

[Writ 26 June 2008, Quezon City, Manila]