Del Monte Philippines Incorporation, a wholly-owned subsidiary of global branded food and beverage firm Del Monte Pacific Limited (DMPL), has announced that it has entered into an agreement for the proposed 13% sale of its existing ordinary share to SEA Diner Holdings Pte Ltd. for $130 million.
SEA Diner Holdings Pte Ltd., a Singapore-based focused on investing in companies in the consumer sector in China and the Southeast Asia region. 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 Inc., on the other hand, is engaged in the marketing and production of food and beverages. For over 90 years the Company produces and grows pineapples, as well as provides desserts, condiments, juices, sauce, pasta, and foodservice packs in the Philippines under the Del Monte brand and exports these products under the S&W brand.
DMPI has posted a net loss of US$75.6 million for the past six months ended Oct. 30, 2019, contrary to past earnings of US$11.4 million. In its filing, the company said that the US$130 million consideration for the proposed sale of a stake in DMPI takes into account, among other factors, about 15.7 times the price-earnings multiple ratios of DMPI for the financial year ended Apr 30, 2019 earnings. Also factored in is the expected positive value-add and contribution from the investor following the closing of the proposed sale.
In a disclosure, Singapore-listed DMPL said that it had a deal with SEA Diner for the proposed sale of about 363.7 million existing ordinary shares of its Philippines subsidiary, subject to certain conditions.
“The funds that can be raised from the proposed sale will be used for the group’s capital restructuring plans moving forward, especially given that the company was unable to undertake the proposed public offering due to volatile market conditions that show no signs of improving,” the disclosure said
The funds that will be raised in the proposed share sale will allow DMPL to free up certain credit lines to pursue other opportunities after the proposed public offering of its Philippines subsidiary was deferred.
DMPL stated that having SEA Diner as an investor will help Del Monte Philippines grow its fresh fruit sales in China, where SEA Diner has close relationships with online and offline food retailers. The investor can also help DMPI Grow its frozen fruit sales in China as well as help DMPI with its digital and automation strategies.
In February 2018, DMPL had announced its intention to public offer and list some of the ordinary shares of Del Monte Philippines on the Philippine Stock Exchange. However, in June 2018 DMPL had decided to defer the proposed public offering due to “adverse market conditions” and would only resume when market conditions improved.
“As market conditions have yet to improve, no further action has been taken by the company (DMPL) concerning the proposed public offering,” DMPL said in its disclosure. The company’s board had since decided to explore the possibility of partnering with an investor to enhance value in Del Monte Philippines through a private placement, the disclosure added.