Del Monte Philippines Inc, a wholly-owned subsidiary of global branded food and beverage firm Del Monte Pacific Limited (DMPL), is selling 13 per cent of its existing ordinary shares to Singapore-incorporated SEA Diner Holdings for $130 million.
The proposed share sale comes more than a year after Del Monte Philippines shelved its planned initial public offering (IPO), which targeted to raise net maximum proceeds of about $324 million, due to “adverse market conditions”.
In a disclosure, Singapore-listed DMPL said it has entered into an agreement with SEA Diner for the proposed sale of about 363.7 million existing ordinary shares of its Philippines subsidiary, subject to certain conditions.
The net cash proceeds of approximately S$155.5 million ($115 million) will be used to pay certain outstanding loans of DMPL.
SEA Diner is focused on investing in companies in the consumer sector in China and the Southeast Asia region. Together with its affiliates, the company has invested over $1 billion in ASEAN and Chinese consumer businesses to date, including consumer product and technology companies.
Del Monte Philippines, on the other hand, is engaged in the production and sale of food and beverage products – such as fruit juices and juice drinks, packaged pineapple and mixed fruit, spaghetti sauces, and culinary mixes – in the Philippines under the Del Monte brand and exports these products under the S&W brand.
It also operates one of the world’s largest fully-integrated pineapple operations and has been growing and processing pineapple for over 90 years.
DMPL said having SEA Diner as an investor will help Del Monte Philippines grow its fresh fruit sales in China, where SEA Diner has close relationships with online and offline food retailers, among other benefits.
The funds that will be raised in the proposed share sale will also allow DMPL to free up certain credit lines to pursue other opportunities after the proposed public offering of its Philippines subsidiary was deferred.
In February 2018, DMPL had announced its intention to public offer and list some of the ordinary shares of Del Monte Philippines on the Philippine Stock Exchange. The plan was to offer about 559.5 million shares to raise up to P16.7 billion, or about $324 million.
DMPL, however, announced in June 2018 that it had decided to defer the proposed public offering due to “adverse market conditions” and would only resume when market conditions improve.
“As market conditions have yet to improve, no further action has been taken by the company (DMPL) in relation to the proposed public offering,” DMPL said in its disclosure.
The company’s board had since decided to explore the possibility of partnering with an investor to enhance value in Del Monte Philippines through a private placement, the disclosure added.