URC set to borrow P26.48 billion for NZ Snack Food purchase
MANILA - Universal Robina Corp. (URC), the food manufacturing group of the Gokongwei family, said it may raise the entire P26.48-billion amount to complete the purchase of New Zealand’s top snack food company, NZ Snack Food Holdings Ltd.
Bach Johann Sebastian, JG Summit Holdings Inc. senior vice president for corporate planning, said URC has a strong balance sheet that will allow the company to borrow the entire P26.48 billion for the said transaction. JG Summit is the Gokongwei family’s holding firm.
“URC has a strong balance sheet and it does not have a lot of debt. It has the ability to raise [the entire amount] through debt,” Sebastian said at the sidelines of the EJAP-ING Economic Forum in Makati City on Wednesday.
“The banks lend to companies that don’t need the money. It’s not a negative on the banking system. It’s just how things are because they want to be reassured of repayment and URC is a good creditor,” he explained.
Sebastian said the buy-in will still require regulatory approval from New Zealand’s Overseas Investment Office. He said that the company sees no problem in getting the said authorization.
“[NZ Snack Foods’] products are already sold here but [they’re] expensive. We have to strategize as to which products can be sold here and which [URC] products can be sold [in New Zealand] or in Australia or in other markets,” he said.
The maker snacks such as Chippy, Piattos and Granny Goose said it will use its offshore unit, URC International Co. Ltd., for the said buy-in estimated to reach NZ$700 million. About NZ$100 million will be payable immediately and the rest upon completion of the deal. “I personally think there is a brand value to [the products] being manufactured and sourced from New Zealand. It will take some work, but you don’t fix what’s not broken. So that’s what we’ll do; we’ll just import,” Sebastian said.
Griffin’s is the No. 1 snack food company in New Zealand and has a growing presence in Australia, as well as a strong platform for Asian expansion. It has a leading market share in biscuits with various portfolio of iconic brands such as Cookie Bear and Belgian Creme. Griffin’s also corners the bulk of the market for wrapped snacks with its Nice & Natural brand and is second in the salty snacks category with its ETA brand.
The company was founded by John Griffin in Nelson in 1864. It was acquired by American firm Nabisco in 1962. In 1990 ownership switched from Nabisco to Britannia Foods. Griffin’s then sold its confectionery business to Cadbury in exchange for the Hudson Cookie Bear and its chocolate biscuits range.
In December of the same year, French food producer Danone bought the company from Britannia Foods and then to Pacific Equity Partners in 2006.
Headquartered in Auckland, Griffin’s has two manufacturing facilities producing a variety of snack products. The New Zealand firm generates approximately NZ$280 million in annual net sales.
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