* Deal gives CPF entry into world’s largest food market
* Plans to use internal cash to finance the purchase
* CPF shares hit 5-week low (Adds details on financing, share reaction)
By Khettiya Jittapong and Manunphattr Dhanananphorn
BANGKOK, Nov 17 (Reuters) - Thailand’s Charoen Pokphand Foods Pcl (CPF) said it will acquire U.S. frozen-food producer Bellisio Parent LLC for $1.075 billion, paving the way for its entry into the world’s largest food market.
The acquisition is in line with CPF’s strategy to expand into high-potential markets, CEO Adirek Sripratak said in a statement.
CPF, controlled by Thailand’s richest man Dhanin Chearavanont, signed a purchase agreement on Thursday with seller Bellisio Consolidated Equity, and planned to use internal cash to finance the acquisition, the statement said.
CPF shares plunged as much as 5.2 percent to a five-week low on concerns that the deal may be too expensive and could affect the company’s financial position.
The company had cash or cash equivalent of 43 billion baht ($1.21 billion) at end-September, according to its financial statement.
CPF, Thailand’s largest meat and feed producer with operations in 14 countries, has said it planned to expand its offerings with more value-added products to serve rising demand in new markets.
Bellisio group reported net sales of $668 million for the year ended Sept. 11.
The transaction, subject to customary closing conditions and regulatory approvals, is expected to be completed within 180 days, and will enable CPF to gain access to the North American market, it said.
Bellisio group is the third-largest producer of single-serve frozen entrees in the United States by unit share with well-known brands such as Michelina‘s, Boston Market, Chili‘s, and Atkins.
The U.S. firm, which launched operations in 1990, has four facilities located in Ohio, California and Minnesota. It leads the single-serve frozen entrées market in Canada.
Joel Conner, chairman and CEO of Bellisio group, said the deal should boost growth for Bellisio and support CPF’s vision of being the “kitchen of the world.”
CPF, the flagship business of Thailand’s largest agribusiness conglomerate Charoen Pokphand Group, has been looking to buy assets overseas to boost growth and offset a slowdown at home.
JP Morgan was the financial advisor for the deal, while Davis Polk & Wardwell LLP acted as legal counsel for CPF.
Last month, Chai Tai (China) Investment Co, an indirect subsidiary of CPF, acquired a 70 percent stake in China’s animal feed producer and chicken meat processor, Fujian Sumpo Foods Holding Co, for 1.7 billion baht ($48 million), as part of its business expansion in China. ($1 = 35.4300 baht) (Reporting by Khettiya Jittapong and Manunphattr Dhanananphorn; Editing by Sherry Jacob-Phillips and Amrutha Gayathri)