AP report 'won't hurt TUF deal'

AP report 'won't hurt TUF deal'

SET-listed Thai Union Products Plc (TUF), the world's biggest canned and frozen tuna exporter, says the recent Associated Press (AP) report on labour abuse in the fisheries industry is unlikely to affect its US$1.5-billion deal to acquire California-based Bumble Bee Foods.

The deal is expected to be concluded in the second half of this year.

However, in a statement the company admitted one of its suppliers was mentioned in the AP report on the scandal but said it had already cut ties with the supplier.

"We're still on track to acquire Bumble Bee, but I cannot give any further details, as the deal is still pending approval by US anti-trust authorities," a company representative told the Bangkok Post, referring to the deal that would make TUF a major seafood player in Canada, where the company currently has no presence.

Prior to the Bumble Bee deal, TUF had spent a combined 3.45 billion baht to acquire European fresh and canned seafood producers MerAlliance SAS and King Oscar AS last year.

Both acquisitions have allowed TUF to enter premium markets in the EU.

The deals will help TUF to achieve its revenue targets of $5 billion this year and $8 billion in 2020.

The company has focused on mergers and acquisitions in recent years in pursuit of its strategy to have a global presence.

TUF began penetrating foreign markets in 1997 with its takeover of Chicken of the Sea, the third-biggest canned tuna brand in the US.

The firm accepted that Thai Union Manufacturing Co, which was mentioned in the AP report as involved in forced labour and slavery, was one of its suppliers.

However, TUF said it terminated trade relations with the company immediately after the AP report came out.

The AP published a story claiming that slaves, mostly from Myanmar, were beaten and tortured to catch fish for fishing businesses in Thailand.

"Our connection with the trade supplier mentioned in the article was terminated immediately when it was alleged to have been involved in forced labour and labour abuse," TUF said in the statement.

Senior officials of TUF including the chief executive were not available for comment.

TUF admitted that cutting off one of its suppliers would have an effect on its production in the short term since Thai Union Manufacturing Co accounted for 30-40% of its tuna production.

TUF will seek a new supplier or import tuna from other sources to compensate for the drop in supply.

"We have about 100 suppliers that would help to provide raw material for us during the time we're seeking a new trade supplier," the TUF representative said.

"This would cause only minimal disruption to the production line."

TUF shares closed yesterday on the SET at 19.90 baht, down 20 satang, in trade worth 218 million baht.

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