Further Update On Dongwon -StarKist Dealff

Dongwon Group, which owns South Korea’s biggest canned-tuna maker, will buy Del Monte Foods Co.’ s StarKist seafood division for $363 million in the biggest overseas takeover by a South Korean food company.

Dongwon Enterprise Co., the holding arm of the industrial group, and affiliates Dongwon F&B Co. and Dongwon Industries Co. will buy StarKist, which accounts for 37 percent of the $1.8 billion U.S. canned-tuna market, the companies said in separate statements to the Korea Exchange.

Buying StarKist will help Dongwon gain share in a global market that’s growing about 8 percent a year as profit from canned tuna declines at home. Dongwon F&B, which has about three-fourths of South Korea’s $382 million canned-tuna market, has posted declines in annual net income every year since 2003.

StarKist’s brand recognition may also help Dongwon expand sales in South America and Europe, the South Korean group said in a separate e-mailed statement.

Del Monte expects the divestiture of StarKist to help improve margins and reduce earnings volatility, while enabling it to focus on faster-growing businesses, the San Francisco- based company said today in a statement on Business Wire. The company said last month it may sell StarKist, which accounts for about 10 percent of its revenue, as it faces higher fish costs.

Dongwon F&B shares gained 0.2 percent to 41,100 won as of 12:54 p.m. in Seoul, breaking a five-day slide. Dongwon Industries, the world’s biggest tuna catcher by volume, lost 1.9 percent to 131,000 won. Del Monte declined 1.6 percent to $7.60 on June 27 in New York.

Credit Suisse Group arranged the sale.

Source: Bloomberg