Bright Food Group Co., China’s second-largest food company, may make a purchase in Europe or Australia in as soon as six months as it seeks to boost overseas sales to as much as 30 percent of its total in five years.
“Many projects are under negotiations,” Chairman Wang Zongnan said in an Aug. 5 interview in Shanghai, referring to overseas purchases. “The next acquisition may take place in half a year to a year.”
Potential targets could include European or Australian companies in the food-distribution and sugar industries, Wang said at an event marking Bright Food’s five-year anniversary. Buying overseas assets may help the closely held company make the best use of its “extremely” strong distribution network in China, said Shaun Rein, managing director of Shanghai-based China Market Research Group.
“Rather than spending the money and time building up new brands, it makes sense for them to acquire a well established foreign brand and leverage its strong distribution,” said Rein.
Bright Food, controlled by the Shanghai city government, is considering making an offer for Australia’s Treasury Wine Estates Ltd., the world’s second-largest winemaker, two people familiar with the matter said in July.
Bright Dairy & Food Co., the group’s flagship listed arm in Shanghai, fell 3.5 percent to 8.73 yuan as of 1:20 p.m. after earlier tumbling as much as 9.1 percent. The benchmark Shanghai Composite Index declined 3.4 percent. Bright Dairy & Food has lost 15 percent this year, compared with a 9.7 percent drop for the benchmark.
White Rabbit
The maker of “Big White Rabbit” brand candy earlier this year lost out to General Mills Inc. for a stake in French yogurt maker Yoplait. Last year, Wilmar International Ltd. outbid Bright Food for CSR Ltd.’s sugar unit.
“The group will continue to actively pursue opportunities to cooperate with foreign companies, in order to broaden resources base and expand distribution,” Wang said in a speech to hundreds of employees at the ceremony.
There have been more than $400 billion worth of cross- border deals in the food and beverage industry over the past five years, with mainland Chinese companies accounting for less than $6 billion, according to data compiled by Bloomberg.
Bright Food, with interests that span food and beverage, farming and retailing, was established by merging four state- owned companies in August 2006.
Wang in April said he aimed to boost revenue from outside China to as much as 30 percent of the company’s total, from the current 5 percent.
Fund-Raising Plans
Profit rose 21 percent to 1.63 billion yuan ($254 million) in the first half, Bright Food said in a statement released before the ceremony. Sales increased 18 percent to 35.7 billion yuan in the first six months from the same period last year. The company aims to reach sales of 120 billion yuan in 2015, according to Wang.
“Bright” is a brand created by Shanghai Yimin Foods Co., one of the four companies that merged to form Bright Food.
Bright Food may raise 6 billion yuan through an initial public offering of its sugar unit and a bond sale, Wang said in April.
It inquired last year about acquiring GNC Holdings Inc., the retailer of vitamins and supplements, before the Pittsburgh- based chain raised $360 million in an initial public offering.
The company is in advanced talks to buy Manassen Foods from Champ Private Equity, the Australian Financial Review reported last month, without saying where it got the information.
--Michael Wei and Margaret Conley in Shanghai. Editors: Nicholas Wadhams, Frank Longid
To contact the reporters on this story: Michael Wei in Shanghai at mwei13@bloomberg.net; Margaret Conley in Shanghai at mconley3@bloomberg.net