BANGKOK -- Thai Union Group has given up on buying Bumble Bee after struggling to win U.S. regulatory approval for a $1.51 billion deal that would have made the world's top producer of canned tuna even bigger.
This puts the Bangkok-listed seafood company at a crossroads in its acquisitions-driven growth strategy.
"We have decided to focus our energy on our existing business," CEO Thiraphong Chansiri said Friday.
Thai Union and Lion Capital, the investment firm selling Bumble Bee, saw little chance of the U.S. Justice Department approving the acquisition by their agreed-on deadline of Dec. 18.
Just over a year ago, Thai Union announced an agreement to buy Bumble Bee, the second-biggest name in canned tuna in the U.S. It had planned to complete the transaction as early as June.
But having already devoured Chicken of the Sea, which ranks third in the U.S., Thai Union would gain a market share of over 40% by downing Bumble Bee -- a red flag for America's antitrust watchdog. Thiraphong had said his company was willing to sell off the earlier acquisition to make room for the latter one.
Thai Union aims to double sales to $8 billion by 2020. To do so, it must achieve a 47% increase to $5 billion this year, the CEO has said. But the company's 2015 revenue target rests on the Bumble Bee acquisition, as its own sales have grown just 3% in the first nine months of the year. Thai Union shares tumbled nearly 3% Friday on news that the deal collapsed.
The company's strategy of buying proven brands has given it a phenomenal rise to market-leading shares in the U.S. and Europe. This scale means future acquisitions also likely will draw tough antitrust scrutiny. The company wants to venture into the Middle East and other new markets, but Thiraphong concedes they will take years to reach Western size.