TUF May Cut Stake In Chicken Of The Sea

Thai Union has indicated that it may cut its holding in US top tuna brand Chicken of the Sea (COS) in order to help facilitate its planned purchase of Bumble Bee Seafoods (BB). Going ahead with the move would see TUF’s potential for a 40 percent grasp on the US tuna market shrink.

The company, which announced the possible plan today, said that the divestment was one of the options it was considering in order to smooth the flow of its USD 1.5 billion acquisition of BB, which is still waiting on approval from US authorities.

A potential driving force behind the reduction in TUF’s COS stake could surround concern of the company possessing a substantial share of the US higher value canned albacore (solid white) market.

BB is currently the leading player in this market, with a stake approaching close to 40 percent. With both COS and BB under its ownership, Thai Union could get its hands on a more than 50 percent share. Therefore divestment may come in the form of Thai Union making sure that its share of the albacore market is acceptable to US authorities.

TUF CEO, Thiraphong Chansiri said that the firm is considering every option. “We have not made a decision yet about the divestment and it should become clear in the next four to six weeks.”

According to Nielson figures from end of March 2014, in terms of volume share of the US shelf-stable market, BB had a 25.5 percent stake, and COS 14.6 percent. In terms of value, these numbers were 28 percent and 13.8 percent respectively.

That means that if TUF was to own both brands in their entirety, it would give the Thai-based firm a more than 40 percent volume share of the US tuna market, and a 41.8 percent value share.

The market leader, StarKist, according to the data, holds around a 36 percent volume share and 39 percent dollar share.

Thai Union’s recent stock market performance has indicated a lack of confidence from investors, on the heels of several incidences; one of these being that TUF’s US holding company, Tri-Union Seafoods received a subpoena last month from the Department of Justice (DOJ).

The order saw TUF postpone a planned Preferential Public Offering, in which it was aiming to raise USD 380 million to part-finance the Bumble Bee buy. Shares took a hefty fall following the news.

Atuna.com had previously speculated over Thai Union’s potential sale of Chicken of the Sea, following the initial news of BB being put on the auction block. This was based on expectations that a purchase may be obstructed by US anti-trust regulators.