Thai Union Frozen Products (TUF) joined the auction of MW Brands, a Paris-based global canned seafood business, citing upside potential from possible acquisition deal.

The deadline for final bids will be set toward the end of June. The enterprise value, including debt, is expected to be around EUR650-700 million (US$777-$837 million).

If TUF can win the bid, it should be positive to its sales and earnings, the company said. Based on MW's sales in 2009 at EUR444 million (US$531 million) and TUF's 2009 net margin of 4.8%, MW's net profit was derived at THB852 million (US$26.1 million), according to the company.

Holding the estimates constant in 2010, TUF predicted an upside potential of 22.8% to 2010 forecast. Although, the size of the deal is quite large, TUF is capable of finance the acquisition thanks to its low gearing ratio of 0.6x (as of the end of 2010's Q1). If it funds the acquisition with 100% debt, its gearing ratio would jump to 1.6x, leading to the possibility of a capital increase of around 10%-30%. However, the benefits should outweigh the dilution effect, the company added.