Uni-President Enterprise Corp’s (UPEC, 統一企業) acquisition of a South Korean food and beverage brand aligns with the company’s overseas expansion strategy, Yuanta Securities Investment Consulting Co (元大投顧) said on Friday.
The US$229.08 million deal for a 74.75 percent stake in Woongjin Foods Co is expected to offer potential revenue and earnings for Uni-President after the Taiwanese conglomerate ended a joint venture partnership with Starbucks Corp in eastern China late last year, Yuanta said in a research note.
“The acquisition is consistent with UPEC’s strategy of focusing on the F&B [food and beverage] segment, achieving complementary synergy in product offerings and expanding its footprint into the northeast Asia market,” Yuanta analyst Juliette Liu (劉珮昀) said in the note.
“Uni-President can export popular Korean drinks to overseas markets, leveraging the group’s capabilities,” she added.
Uni-President would acquire 49.1 million share of Woongjin Foods at US$4.67 per share via its 100-percent-owned subsidiary Kai Yu (BVI) Investment Co Ltd (凱友投資), according to a company regulatory filing on Thursday.
Established in 1976, Woongin Foods holds about a 4 percent market share in the non-alcohol beverage market in South Korea, with its main products including ginseng drinks, juice, rice drinks and other sweet beverges.
The company posted sales of US$201 million with net profit of US$15 million last year, Liu said.
Yuanta is positive about the deal, expecting it to contribute 2 percent and 1 percent of the company’s total sales and net profit respectively, she said.
In the first 11 months of the year, Uni-President’s cumulative revenue increased 8.01 percent annually to NT$398.89 billion (US$12.9 billion).
The Tainan-based company’s net profit in the first three quarters edged down 0.58 percent year-on-year to NT$14.8 billion, affected by higher taxes on undistributed earnings and corporate income. Earnings per share were NT$2.61 from January to September.
Shares of Uni-President rose 0.14 percent to NT$69.5 on Saturday in Taipei trading. They have risen 5.3 percent so far this year, compared with the broader market’s 9.36 percent decline over the same period.
Yuanta has a “hold” rating on Uni-President, with a 12-month target price of NT$80.
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