Del Monte unit buys US vegetable business

ABS-CBN News

Posted at Mar 11 2015 11:20 AM | Updated as of Mar 11 2015 07:20 PM

MANILA, Philippines - Del Monte Pacific Ltd. on Wednesday said its US subsidiary has acquired a San Francisco-based vegetable business.

Del Monte Foods, Inc.'s (DMFI) unit Vegetable Acquisition Corp. has acquired Sager Creek Vegetable Company’s vegetable business in San Francisco, effective March 11.

Del Monte said it paid $75 million in cash for Sager Creek's assets, which include property, plant and equipment and intellectual property.

Sager Creek is a producer of specialty vegetables for the food service and retail markets. Among its brands are Veg-All, Freshlike, Popeye, Princella and Allens'.

The acquisition cost will be financed through DMFI’s revolving credit facility, the payment for which will be secured by the acquired assets.

"The acquisition of Sager Creek’s business provides Del Monte access to new customers and new retail product offerings and the opportunity to expand on Sager Creek’s food service business platform, while driving significant operating synergies in our network of vegetable production facilities," the company said.

Losses continue

Meanwhile, Del Monte Pacific reported it posted a $2.2 million net loss in the third quarter ending January 31, 2015, on the back of $637.6 million in sales during the period.

Del Monte Pacific attributed the loss to higher interest expenses related to its acquisition of DMFI, as well acquisition-related expenses and the non-capitalizable portion of the SAP implementation at DMFI which went live at the end of the third quarter.

Del Monte Pacific had acquired DMFI, the consumer food business of Del Monte Corporation in the United States, last February 2014.

"We are on track to deliver future growth, having stabilized the business with the initiatives taken post-acquisition, which include reverting back to competitive pricing levels, reintroducing the well
recognized classic Del Monte label and reinstating trade support levels,” said Nils Lommerin, Chief Executive Officer of Del Monte Foods, Inc.

However, the company said sales in the US market rose 21 percent in the third quarter, as Philippine Del Monte products were introduced.

Del Monte Pacific also noted its branded business in Asia, which includes Del Monte in the Philippines and the Indian subcontinent, as well as S&W in Asia and the Middle East, and export sales globally, posted sales of $136.2 million, up 10 percent, and net profit of $12.2
million, up 36 percent.

For the nine-month period ending January 31, 2015, the Del Monte group generated sales of $1.6 billion, on the back of DMFI's sales of $1.3 billion.

The group incurred a net loss of $23.9 million in the 9-month period.

Del Monte Pacific is 67 percent-owned by NutriAsia Pacific Ltd, which is owned by the Campos family's NutriAsia Group of Companies.