Del Monte Pacific considering American arm listing after turnaround – exec
Del Monte Pacific [PSE:DMPL, SGX:D03], the Philippines-based food and beverage company, is considering a US listing of its North American subsidiary Del Monte Foods Inc (DMFI) after it turns around, Executive Director Edgardo M Cruz, Jr said on the sidelines of a press briefing on 7 April in Manila.
He declined to give the timetable and deal size if the company pursues this since, "it is difficult to conduct an IPO if your house is not yet in order."
A source familiar with the situation said DMFI may be able to turn around its finances within two years.
This news service reported in September 2015, citing sources, that Del Monte Pacific was eyeing a New York Stock Exchange listing once it has completed the consolidation of its US arm. A US listing would give the company prominence and would change the perception that Del Monte Pacific is an "Asia-only" company, as reported.
Del Monte Pacific will be embarking on a 12-month streamlining program to bring DMFI back to profitability, as disclosed to investors.
Once the parent company improves its balance sheet and DMFI's profitability, it is also considering brand acquisitions in the US and Asia Pacific as long as these are within Del Monte Pacific's health and wellness platform, Chief Operating Officer Luis Alejandro said, without elaborating on the deal size.
While Del Monte Pacific is rationalizing its US operations, it is not keen on selling any of its American brands -- Del Monte, Contadina, S&W and College Inn – despite approaches from possible suitors, Treasury Head Augusto Garcia told this news service. He said potential buyers think the company may want to carve out some of its brands for disposal, similar to what the former owner of DMFI did before exiting the business.
Private equity fund KKR & Co, the previous owner of Del Monte US operations, only wanted the pet food business. It carved the pet food unit out and sold the rest of what was then called Del Monte Foods Co to Del Monte Pacific for USD 1.675bn in 2013, he said.
The Del Monte Pacific owner, Jose Campos, Chairman and CEO of NutriAsia Pacific, is not known to let go of brands, especially since none of its US brands are underperforming to a level that would warrant a spin-off, Garcia noted.
The parent may, however, dispose some manufacturing plants and equipment to make DMFI asset-light and improve its margins, he added.
DMFI has 12 manufacturing plants in the US and according to the parent's COO, they have already shut down their plants in Wisconsin and North Carolina after discovering that these were inefficient.
Some supply chain and back office operations were sent offshore, mostly to the Philippines, to save on costs, Alejandro continued. It is also reviewing its low margin toll manufacturing business, which makes white label food products for retailers like Walmart, Costco, Target and Safeway.
Meanwhile it is tapping e-commerce opportunities and is now in talks with Amazon for online distribution of its products, Alejandro added.
For nine months of FY2017 ending January 2017, DMFI's sales decreased by 6%, dragging the entire Del Monte Group's sales down by 2% to USD 1.7bn, according to the company's presentation to investors on 22 March. The North America operations contribute about 80% of total group sales.
It raised USD 200m from the sale of preferred shares in the Philippine Stock Exchange last month to help the group deleverage post-acquisition of DMFI.