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June 25, 2010
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Philippines' Alliance Tuna eyes majority stake in Vietnamese firm
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Philippine canned tuna exporter Alliance Tuna International Inc. may purchase a majority stake in a Vietnamese rice milling and fish processing firm Hiep Thanh Group for US$13.1 million.
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The Hiep Thanh Group is Vietnam's largest private rice milling company and owns one of the few integrated farms owning fish farms and feed mill processing facilities. Its unit Seafood Joint Stock Co. (HTS) exports pangasius) and is among the top 10 largest exporters in Vietnam.
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In a statement to the Philippine Stock Exchange, Alliance Tuna said it signed an agreement to conduct a 90-day due diligence on HTS, with the goal of investing in the Vietnamese group.
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The report said if the results of the due diligence exercise are favourable, the company will invest a total of US$13.1 million for a 50 percent plus one share stake in Hiep Thanh.
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Alliance Tuna said US$10.5 million of these funds will be used to buy out some current shareholders and retire debt. The balance will be used for capital expenditures, mainly for introducing higher margin, value-added pangasius products.
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The firm added that management is currently studying various investment structures to forego investment and will disclose the preferred method once a final decision on it has been made.
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Alliance Tuna said investing in Hiep Thanh will likely boost its revenue and earnings as well as broaden its product portfolio to include rice.
Alliance Tuna, which has tuna canning facilities in Gen. Santos City in Mindanao and in Bitung, North Sulawesi, Indonesia, is eyeing consolidated revenues of over US$150 million this year.
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With the pangasius gaining popularity globally as a premier source of economically priced white meat fish, Alliance Tuna intends to use its existing marketing distribution channels to offer additional products to its seafood clients.Â
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Direct access to major supermarket chains around the world will enable Alliance Tuna to sell Hiep Thanh's products to major buyers, increasing HTS's profitability.
