Bright Food Group Co., the dairy and consumer-products group backed by the Shanghai government, has agreed to buy a majority stake in Israel’s Tnuva Food Industries Ltd. as the Chinese company expands overseas.
Bright Food has reached a preliminary agreement with Apax Partners LLP, which has invested in Tnuva, to acquire 56% of the Israeli company, Pan Jianjun, a spokesman for Bright Food, said in a mobile-phone message today. He said the price has yet to be decided.
The deal would give Bright Food a broader range of high-quality products to bring into China to tap the local demand, said Torsten Stocker, partner at consulting firm A.T. Kearney. “You are also building a portfolio of brands in different markets,” he said, adding he expects more acquisitions to come.
Chinese companies from Bright Food to pork producer WH Group Ltd. have been making acquisitions overseas as rising incomes spur demand for consumer goods while a series of food-safety scandals has hurt confidence in local brands. Bright Food bought a 60% stake in British cereal maker Weetabix Ltd. in 2012.
A call to Apax Partners’ office in Israel outside regular business hours wasn’t answered.
Food Brands
Tnuva owns seven of the 10 best known food brands in Israel and accounts for more than 14 percent of shelf space in the country’s supermarkets, according to the website of private-equity firm Apax Partners, which invested in the company.
Tnuva was formed more than 80 years ago as an agricultural cooperative of 620 farming communities across the country, who were also the company’s suppliers of raw milk and produce, according to Apax. Members of the co-operative approved the sale of a majority stake in Tnuva to Apax in 2007 at a price that valued the company at $1.03 billion at the time.
Bright, which has retail outlets across China, also operates tea, dairy and rice farms. It was established by merging four state-owned companies in 2006.
A deal to acquire Tnuva could value the Israeli company at as much as 9 billion shekels ($2.6 billion), a person with knowledge of the matter said in February.
Pork producer Shuanghui International Holdings Ltd. agreed to acquire Smithfield Foods Inc. for about $4.72 billion in May 2013.
Bloomberg
