August 17, 2016

Philippine snack and beverage giant, Universal Robina Corp. (URC) announced it has agreed to acquire Snack Brands Australia (SBA), Australia’s second largest savory snack manufacturer behind Frito-Lay, for A$600 million (US$461 million).

The deal, which is subject to approval by Australia’s Foreign Investment Review Board (FIRB), was driven by a rising demand in Asia for western style snacks and foods and by the chance to gain a controlling position in the Oceania market.

“URC plans to create a wider footprint in the Oceania region with SBA providing a solid anchor in the highly competitive Australian fast moving consumer goods and retailing market,” the company, a unit of Philippine conglomerate JG Summit Holdings Inc., told the Philippine Stock Exchange (PSE) reports Reuters.

The acquisition of SBA, which brings with it the key brands of Kettle Chips, CCs, Samboy, Cheezels, and French Fries gives Universal Robina 30% of Australia’s A$1.4 billion salty snack market, according to AFR, and comes only two years after Universal’s acquisition of New Zealand’s largest snack maker, Griffin Foods, from Pacific Equity Partners for NZ$700 million.

“The categories of both Snack Brands, URC, and Griffins are fully complementary and will offer a wider range of on trend, on the go, ready to eat snacking categories namely biscuits, wrapped snacks, and salty snacks,” URC CEO Lance Gokongwei said in a regulatory filing according to Rappler.

“The addition of Snack Brands into the URC organization will also further enhance the innovation capability of the total organization and reinforce our thrust on premiumization [sic] given emerging global consumer trends on indulgence, health, wellness, and nutrition.”

Universal plans for SBA to continue as an independent entity post-closing with no loss of management or employed positions, as it aims to integrate SBA’s production capacity with its own Asian distribution networks, according to reports from The Australian.

“What this achieves for the business is to take Australian manufactured product, with its distinct food security advantage, into Asian markets with the benefit of an established distribution force,” said Paul Musgrave, CEO, Snack Brands Australia.

In 2002, SBA was acquired by Australian biscuit and cracker maker, Arnott’s for $280 million. However, SBA didn’t produce the necessary returns and Arnott’s parent company, U.S.’s Campbell Soup Co., hired USB to manage its sale for an asking price of $30 million. Mr. Musgrave then soon led a consortium of investors in the acquisition of the snack maker – indicating that the deal with Universal Robina would bring more than a 15 fold return on investment.

—

Lynda Kiernan