Lorenzos, Singapore firm eye buyout of Cirio Finanziara in Del Monte

The Lorenzo family is in talks with a Singapore-based financial partner to help buy out food firm Del Monte Pacific Ltd. (DMPL).

DMPL managing director Martin Lorenzo said his group expects to reach an agreement to acquire Cirio Finanziara SpA’s 40-percent stake in DMPL within 60 days. At the same time, he said his group will bring in a Singapore-based strategic partner to help raise about $250 million for the acquisition.

The Lorenzo family – who owns the publicly-listed firms Pancake House and Macondray Plastics – is the second biggest stakeholder in DMPL with a 22- percent equity holding through Macondray & Co. Inc. The remaining 38 percent of DMPL is owned by the minority shareholders and the public.

"We already made an offer to acquire Cirio’s 40-percent stake. The money we would be needing is quite large so we need to bring in a strategic partner. We’ll get just one partner," Lorenzo said.

Lorenzo said he is optimistic that his group will have the edge over other parties bidding for Cirio’s stake in DMPL, among them food and beverage giant San Miguel Corp. and Basic Holdings Inc. of tobacco and beer magnate Lucio Tan.

"Del Monte, with the Italian partners, feel that we are the best people to work with. The Italians feel they want to stay but if our offer is good they will sell. It is more of a friendly negotiation," Lorenzo said.

Last April, Cirio ended negotiations with the group of Tan and deferred the planned sale of its stake in DMPL. Basic Holdings, the private holding firm of Tan, had "elected not to implement its offer" to buy Cirio’s stake." Tan offered to buy Cirio’s stake for $180 million to $200 million, reportedly the highest among the bids received by Cirio.

Cirio’s block was earlier valued at around $174 million based on market prices.

The Lorenzo family, however, said it is prepared to match the highest bid for DMPL.

Just last May, San Miguel announced it would pursue its bid to buy into the Singapore-listed food producer.

Cirio Finanziaria is under liquidation after defaulting on 1.3 billion euros ($1.6 billion) in obligations in November 2002. It is looking at selling some of its assets to allow it to repay debt.

Cirio is Italy’s largest canned food company and is a leading producer and distributor of processed food and beverage in Europe. The group produces tomato products (pulp, paste, sauce, ketchup, juice), processed fruits, beverages, olive oil, vinegar and pasta sauce, and also manufactures products from peas, soybeans and tuna fish.

DMPL, on the other hand, owns the Del Monte brand in the Philippines, where it enjoys leading market shares for pineapple juice, juice drinks, pineapple solids, mixed fruits, tomato sauce, spaghetti sauce and tomato ketchup, and also markets products under its second-tier brand, Today’s.

The company aims to become a leading fully integrated Asian-based international food and beverage company by growing existing markets and expanding into new ones. It will work to achieve this by pursuing acquisitions, joint ventures and/or strategic alliances that make sound business and financial sense.

The Del Monte brand originated in the United States in 1892, and has since become a household name all over the world.