TUF no longer a drop in the ocean

As it was the biggest takeover deal that we have ever had, we have to suspend new investment for three years to focus more on strengthening our financial stability and managing our new brands efficiently," Thiraphong Chansiri, president of Thai Union Frozen Products, said.

The company plans to reduce its debt-to-equity ratio from 1.7 times now to 1 at the end of the plan. The company will have to adhere to creditors' restriction to pay no more than Bt1.2 billion in dividends per year to facilitate debt payment.

The group also plans to clear all debts within three years.

By adding MW Brands, TUF has bundled seven tuna brands under its umbrella.

The company has grown into a "collection brand" manufacturer - one of the world's key tuna manufacturers and distributors. The group's share of the world tuna market now reaches 21 per cent.

"It's an important transformation for the company to turn its status from a manufacturer to a branded company and a global player," Thiraphong said.

The acquisition has given the group manufacturing bases in strategic regions including the US, EU, Asia and China, where tuna is an affordable and popular food.

The group also has existing plants in Vietnam, Indonesia and China.

The seven brands will separately access different markets.

The Select label focuses on Asia; Century on China, which now controls the lion's share of 70 per cent of the market; Chicken of the Sea for the US, which is one of the top three brands in the region; Petit Navire and H Parmentier for France; John West for the UK, the Netherlands and Ireland; and Mareblu for Italy.

MW Brands will open up opportunities for the group over the next 10 years, as it will become the platform to access potential markets particularly the 27 EU members, Russia and North Africa, he said.

The group has also set a new goal of achieving US$4 billion (Bt124 billion) in total sales by 2015.

It is an achievable target after expanding its empire. Its previous target of $3 billion by 2012 is likely to be accomplished early.

As this takeover cost 680 million euros or Bt28.5 billion, it will seek the approval from a shareholders' meeting on September 2 to raise capital by 12 per cent through issuing 117 million shares.

The plan is expected to mobilise Bt6 billion in cash and the remainder worth Bt7 billion will be credited by banks. This deal is expected to close by October.

"We see a business opportunity in the future after taking over MW Brands to broaden our export markets," he said.

Tuna exports to the EU are subject to a high import duty of 24 per cent and face barriers, which is the company's weak point in competing with its rivals, he said.

Without the obstacles, export revenue from the EU market will increase from the current 11-13 per cent to 33 per cent.

 After putting together a tuna manufacturing empire, TUF will now practice global management in terms of both sourcing and marketing synergy.

The company's raw materials currently come from the Indian, Pacific and Atlantic oceans.

The company has no manufacturing bases in the Middle East, Australia and Africa, but it can supply those markets from Thailand and the EU.

Despite managing the world's leading brands, the company has not ignored contract manufacturing.

The group's production is split evenly between its own brands and OEM brands.

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