On August 29, Bright Food (Group) Co. Ltd. and Australia's Manassen Foods formally signed an agreement for the former to acquire a 75 percent stake in Manassen for A$397.5 million (US$422 million). The record amount of overseas mergers and acquisitions in China's food industry was set.

Wang Zongnan, chairman of Bright Food, said in an exclusive interview with this reporter that Australia will become a landing platform for overseas M&A.

8 months M&A war

and the subject company signed a confidentiality agreement, the other party agreed to open the database Manason business channels across the retail business, food service, industrial exports and other areas, of which own-brand sales accounted for about 78% of total sales, the agency brand accounted for about 22%.

Wang Zongnan introduced, December 20, 2010, CHAMP Private Equity is interested in selling its shares of Manasen, the bright team after preliminary communication and preliminary financial analysis, and the subject company signed a confidentiality agreement, the other party agreed to open the database. But in Wang Zongnan's view, the real acquisition negotiations began in April this year. in early April, the Bright team, together with the relevant intermediaries, launched a preliminary due diligence on Manasen. on April 29, on the basis of the preliminary due diligence, Bright sent a non-binding offer to Manasen and asked for project exclusivity period.

On May 23, Manason agreed to grant an exclusivity period for the project and allowed Bright to conduct in-depth due diligence, and in June, the project was approved by Bright Group and Nomura Securities was formally retained as the financial advisor.

In July, Bright traveled to Australia twice to negotiate and discuss the transaction price and legal documents, and the two sides finally reached an agreement in August.

The two sides were at loggerheads for a while on issues such as price. Previously, CHAMP offered a high price of $636 million. In the end, the two sides reached an agreement in several rounds of repeated negotiations, closing the deal at an overall valuation of the business of A$530 million, or $562 million.

Tong Kang, managing director of China investment banking at Nomura Securities, said the final price was based on comparable deals and comparable companies.

The existing management was retained through management incentives and other deal mechanisms.

Prior to this, Bright had implemented five acquisitions of Australia's CSR, Britain's United Biscuits, the U.S.'s Goodness, New Zealand's Xinlian Dairy, and France's Uno, with only New Zealand's Xinlian Dairy a success. The remaining four were either abandoned voluntarily or left with no choice.

In Wang Zongnan's view, in the global assets into an inflationary channel, and the appreciation of the yuan environment, Chinese companies go out to overseas mergers and acquisitions, emerging markets to integrate mature markets is an unstoppable trend. As far as food enterprises are concerned, the market will have huge demand in the next 5-10 years, but on the other hand, since the domestic food safety problem will not be solved in the short term under the existing industrial structure, Chinese food enterprises are required to form a whole industry chain through mergers and acquisitions. At present, Shanghai Tobacco and Sugar Group, a subsidiary of Bright, is the most important operating platform for its overseas mergers and acquisitions, as well as the main body for the implementation of the acquisition.

Wang Zongnan believes, "This is an asset that allows us to say goodbye to the era of eyeballing." The bidding also allowed it to understand where the differences in financing programs and risk points are in various regions of the world. In the case of the UK's United Biscuits, it was because it was later found to have pension risk issues that it eventually chose to give up.

"We summarized out five sentences: in line with the strategy, synergies, risk controllable, reasonable price, excellent team." Wang Zongnan also said that through the previous experience, Bright has formed an extensive network of relationships with the international financial community, the investment community, law firms, and governments around the world, and has developed a system for judging the value of projects.

And Tong Kang revealed that the success of the deal also lies in the fact that the exclusivity negotiation was made clear at the beginning, and secondly, the existing management was retained through management incentives and other deal mechanisms. The ability to enter the Chinese market was also an important point in gaining management support.

The remaining 25 percent of Manassen's shares will continue to be held by its current shareholders, including Roy Manassen, funds managed by CHAMP and other current company executives.

Integration Approach and Difficulties

"It's really more of a huge test."

Prior to this, many Chinese companies have faced a series of problems in management, talent and cultural integration after overseas acquisitions, and there have been numerous cases of failed integration.

"This is indeed an even greater test." Wang Zongnan said that in the future, Manasan can carry out synergies with Bright and Tobacco & Sugar in brand and production interoperability, the integrated introduction of mid- and high-end products, internationalized purchasing, raw material provision, and business model replication.

"We will distribute Manasan's products using our channels in China and utilize Manasan's distribution channels on the Australian side to sell Chinese food." Wang Zongnan said, "We will also introduce good access models to China." Manason's distribution agency business has a gross profit of 30 percent, while the average gross profit of this business for Chinese companies is only about 10 percent.

Australia, with its sugar, wine and tropical fruit resources and relatively open investment environment, is the focus of Bright's overseas mergers and acquisitions. Wang Zongnan said Bright hopes to further integrate Australia's food resources and industry under the premise of rapid access to Manasan's existing resources and markets. At present, Bright is looking for sugar, wine, dairy and other related mergers and acquisitions in Australia.