Del Monte to sell StarKist tuna to Korean firm (07/01/2008)

Tag : Canned Tuna

Charlie the Tuna, the big guy whose good taste was never quiteenough to get him canned, is about to head out across the ocean.
San Francisco-based Del Monte Foods Co. has agreed to sell itsseafood business, including the StarKist tuna line that employedCharlie, for $363 million to South Korea's Dongwon Enterprise Co.The brand was owned by Pittsburgh's H.J. Heinz Co. until six yearsago.
The company's shares slipped 50 cents, or 6.6 percent, to close at$7.10 following the long-expected announcement.
Del Monte, and Heinz before it, struggled to make the tuna businessproduce more growth and profits, as Americans chased low prices fortheir tuna salads. A rise in fish and other commodity prices inrecent months just stepped up the pressure.
An executive with Dongwon Enterprise said the acquisition couldhelp it establish a strong foothold in the U.S. market.
There's already a strong international flavor to the tuna offeringsin the grocery store. Thai Union International has been sole ownerof Chicken of the Sea since 2000, while Bumble Bee is part of theholdings of Toronto-based Connor Bros. Income Fund.
In the most recent fiscal year, Del Monte's seafood businessgenerated about $560 million in net sales. The sale, expected tonet after-tax cash proceeds of about $300 million to be used to paydown debt, will include Del Monte's manufacturing operations inAmerican Samoa and Ecuador, and certain assets in California andEcuador.
Although the deal is expected to trim the company's annual earningsper share slightly in the current fiscal year, the impact should beneutral the following year.
For those who haven't caught Charlie the Tuna's commercials overthe years, he was a cool dude with sunglasses and a beret whosecounterintuitive goal in life was to be chosen by StarKist. He wasalways disappointed to hear the brand wanted tuna that tasted good,rather than simply tunas with good taste.
If the sale goes through, it will mark just the latest businessthat Del Monte has sold off since its deal with Heinz. Soup andbaby food lines already have gone to TreeHouse Foods, which nowoperates the former Heinz plant on the North Side.
Pet food and pet snack lines picked up in the exchange have beenmore successful for Del Monte, which has been able to pick upadditional brands to bulk up its pet portfolio.
The company continues to operate a regional office on the NorthShore, where about 400 employees are involved in administrativesupport services. The company recently announced plans to moveabout 100 marketing positions to California.