The Lorenzo group, Del Monte Pacific’s second biggest shareholder, has until Dec. 1 to decide whether it will match First Pacific’s $164-million offer.
Through holding firm Macondray & Co. Inc. (MCI), the Lorenzo group has pre-emptive rights that will allow it to match First Pacific’s bid.
"We’re exploring all our options. We will inform the concerned parties on Dec. 1 whether we will match or sell our stake. We will do whatever will be economically beneficial for the company," MCI president Martin Lorenzo said.
When asked whether the group is willing to tieup with other entities to match First Pacific’s offer, Lorenzo said "anything is possible."
"Anybody can offer to work with us. As long as their proposal makes sense, why not," he said.
Previous bidders for Cirio’s interest in Singapore-listed firm Del Monte Pacific included Southeast Asia’s largest food and beverage conglomerate San Miguel Corp. and the group of tycoon Lucio Tan.
Earlier reports said the two groups withdrew their bids because Cirio’s asking price was "too high". Cirio wanted between $150 million to $250 million for the Del Monte stake up for sale.
Tan offered $180 million for the shares but wanted to buy the shares in tranches.
But whether the Lorenzo family will be able to match First Pacific’s offer and whether all family members will endorse such a move is the current source of speculation, analysts said.
The family-owned casual dining restaurant chain Pancake House recently completed the acquisition of Japanese fastfood chain Teriyaki Boy for P230 million.
"This is something that will be decided upon by our family. The company (Del Monte) has sentimental value to us. Its hard to let go when you have something like that," Lorenzo said.
Should the Lorenzo family fail to bid, First Pacific will make a mandatory general offer in February, which should last 60 days.
First Pacific’s offer is a 20-percent premium to Del Monte Pacific’s stock price. However, at an estimated 9.9 times 2005 EBITDA (earnings before interest, taxes, depreciation and amortization, the deal is considered fairly priced and has been well received by analysts.
Del Monte Pacific’s business activity is focused primarily on the Philippines, with 70 percent of its revenues coming from processed foods (ketchups, tinned pineapples, sauces), 25 percent from beverages, and the rest from fresh pineapples and cattle feed.
In the processed foods market, Del Monte holds a commanding 61-percent share in the Philippines – where it owns the right to use the Del Monte brand. It also owns the rights to produce and distribute under the Del Monte brand in India.
The purchase of Del Monte Pacific will expand the food business of First Pacific, which controls the Indonesian company Indofood Sukses Makmur, the world’s biggest maker of instant noodles. The deal will mark the end of a two-year attempt by Cirio, which is in liquidation, to sell its 40-percent stake.
Del Monte also owns the China-based Great Lakes Fresh Foods and Juice, which makes juice under the Great Lakes, Ming Lang, Rougemont and Welch’s brands.
Last year, Del Monte Pacific reported a $28.1-million profit on sales of $199.6 million. It posted a net income of $30.2 million in 2003 on revenues of $199.2 million.