BANGKOK, July 28 — Thai Union Frozen Products PCL, the owner of the “Chicken of the Sea” canned tuna brand, said today it would buy MW Brands Holdings SAS for $884 million to become the world’s biggest seafood firm.

TUF is already the world’s largest canned tuna maker, while France-based MW has brands such as canned fish producer John West and canned tuna producer Petit Navire.

“MWB’s strong European footprint will provide us with further business opportunities in the future through a strong customer base, distribution and brand leadership,” TUF President Thiraphong Chansiri said.

MW was formerly part of HJ Heinz Co and is being sold by private equity firm Trilantic Capital Partners, which bought it in 2006.

TUF’s investment, Thailand’s second-largest overseas deal, will boost its tuna processing capacity to 500,000 tonnes per year.

Shares in TUF dropped nearly 5 per cent at one stage to 45.50 baht due to worries about its debt-to-equity ratio rising to fund the deal.

“With the deal being done through borrowing, this should bump up its (debt to equity) to 2.2-2.3 times in the short term,” said Finansia Syrus Securities analyst Jitra Amornthum.

However, Jitra added: “We see positive factors coming in from marketing. The move should help strengthen TUF’s horizontal expansion by diversifying its customer base into Europe.”

At the midsession break, TUF shares were down 3.14 per ent at 46.25 baht, while the main Thai index was flat.

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The €680 million (RM2.82 billion) deal follows the US$2 billion (RM6.39 billion) purchase earlier this month of Australia’s Centennial Coal by Banpu, Thailand’s biggest ever overseas acquisition.

Through the deal, TUF will add four processing plants in France, Portugal, the Seychelles and Ghana to its five processing facilities in Thailand, Indonesia, Vietnam and the United States. Its fishing fleet will more than double to nine vessels from four. The acquisition would increase Europe’s contribution to TUF’s sales to more than a third from 11 percent, the company said.

MW brands, which has operations in several European countries including Britain and Italy, had sales of €448 million and total assets of €559 million in its business year that ended in March.

TUF posted sales of 68.9 billion baht (RM6.83 billion) with a net profit of 3.3 billion baht in 2009. Tuna products accounted for 44 per cent of its sales.

The Chicken of the Sea name has been around since the early 1900s. Albacore tuna used to be known as chicken of the sea because its pale colour and mild flavour reminded fishermen of chicken.

Financing for the acquisition has been fully secured, TUF said in a statement, with 340 million in euros in loans from international banks and a further 15 billion baht from Thai banks.

TUF also said it would issue convertible bonds worth up to €60 million for a private placement plus 116.83 million new shares for conversion.

The convertible bonds would have a maturity of four years with a coupon of 5 per cent and an overall yield of 8 per cent if not converted into common shares, it said, adding the conversion price was 46 baht a share. — Reuters