M&A

Bright future?

Shanghai food company finally secures an overseas acquisition

Next stop, Wagga Wagga

Simon Manassen, a Jewish survivor of the Second World War, started out selling European foods out of the back of a van in Sydney in 1952. Since then the company that bears his name has had many different owners.

In the seventies it was bought by Beatrice Foods, then the world’s largest food company. Private equity fund KKR later bought Beatrice in the early eighties, before Manassen was offloaded to Cadbury. But the business did not fit into the chocolate empire and in 1988 Simon’s son, Roy, arranged a buyout. In 2006 Champ PE, an Australian buyout manager, then made a significant investment in the firm.

So Manassen is no stranger to changing hands, which might make the transition to its latest owner a smoother process.

That will be a relief to Manassen’s new suitor, which has been chasing an overseas deal for a while.

Last week, Shanghai’s Bright Food agreed to purchase 75% of the company, valuing its target at A$530 million ($556 million) including debt, reports the Financial Times. The remaining equity will be held by Roy Manassen, who retains a 15% stake, and Champ PE, which keeps 10%.

The deal is subject to approval by the Australian regulators.

Bright has been thwarted repeatedly in its attempts to complete a foreign acquisition. It thought it had a deal to buy the sugar operations of CSR last year, accounting for half of Australia’s sugar output, but was beaten at the last minute by Wilmar International (see WiC68). And its bid for French yogurt maker Yoplait also failed earlier this year, when Yoplait ended up in the hands of General Mills.

Now that Bright looks like closing a deal at last, it will have to work hard to find the synergies between the two companies. Bright, mainly known for its dairy range, plans to use Manassen’s distribution network to introduce its own products into Australia. Manassen distributes around 30 well-known brands in Australia, some of them international like Ryvita biscuits and Bovril, and others more local, such as the brilliantly- named Mrs Balls Chutney.

Wan Ge, an analyst at China Venture, told Securities Daily that the deal could improve the image of Chinese food in overseas markets, which in turn could be the foundation of further expansion abroad.

But Wan was also quoted in the FT highlighting the difficulties that still need to be overcome – namely, concerns about Chinese food safety that could make it hard for Bright to sell its dairy products in Australia.

That seems a fair point: Bright might be better served convincing more of its Chinese consumers to buy its dairy products before it has a go with sceptical Aussies.

But if the deal does prove a success, Bright may well go back to Australia for future acquisitions. The company has a strategic focus there, reports the China Times, and has a team on the ground searching for local investments.

The newspaper also talks about Bright’s thoughts on other markets, including the UK. For example, after performing due diligence on United Biscuits, Bright came to the conclusion that the British pension system was “a burden beyond affordability” and pulled back.

M&A bankers say Bright has been on a steep learning curve. When bidding for the US vitamin firm GNC, a squabble over pricing led to the target’s owner choosing an IPO rather than selling to the Chinese suitor.

Bright’s critics say that the poor track record in completing acquisitions (see WiC93, Talking Point) is down to management inexperience. But with one successful transaction apparently under its belt, it will hope to proceed with greater confidence as it settles on future targets.

Then again, the sceptics wonder whether state-owned Bright’s bosses can actually make this deal work – given the cross-cultural challenges faced. Manassen’s employees may be among the doubters, as they take their place among more than 500 Bright subsidiaries.


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