Bright buys into Spanish food distribution firm

Move expected to spearhead further push into Europe

Bright Food (Group) Co Ltd, the Shanghai-based food giant, has completed the acquisition of Miquel Alimentacio Grup, Spain's second-largest food distributor, in a move to expand its European distribution network.

The 110-million-euro ($123.15 million) takeover was made jointly by Shanghai Tangjiu Group Co Ltd, a fully owned Bright Food subsidiary which took a 72 percent stake in Miquel, JIC Investment Co Ltd and Shenzhen Donghuatong Trade Development Co Ltd.

Officials said they expect sales of 1 billion euros from Miquel this year, a company with wide distribution networks in place in Spain and other European countries, which now becomes the largest Spanish firm to be taken over by a Chinese food company.

"The deal will enable Bright Food to create a global distribution platform using Miquel's existing network, and to supply a larger variety of imported goods for Chinese consumers," said Ge Junjie, Bright Food's vice-president and chairman of Shanghai Tangjiu.

Miquel has a strong range of food and beverage products appealing to Chinese consumers, particularly wine and olive oil. Bright Food now expects the first shipments of those to arrive in China in November.

"Our first step will be to integrate these global food resources, and then we plan to use them to manufacture and then sell some of our own Chinese brands across the world," said Ge.

Founded in 1925, Miquel has 63 cash-and-carry stores in 11 Spanish districts, serviced by six logistics distribution centers. Its 14,000 different products on sale come from 2,500 Spanish and more than 100 international suppliers. Among those products are some self-owned brands.

Liu Peng, an analyst from Guosen Securities Co Ltd, said Bright Food's latest takeover could be followed by other Chinese food companies, adding the country is now the world's biggest processed-food consumer－a market driven by a growing middle class which is seeking higher-quality products from overseas.

"With rising public attention on food quality, more traditional food companies like Bright Food and China Oil & Foodstuffs Corp are expanding their resources and networks from domestic to overseas areas," said Liu.

Bright Food's plans to transfer some manufacturing to Spain, said Liu, is indicative of how wages are rising in China, even for often lowly paid food factory workers.

According to a new report from the Boston Consulting Group, last year alone Chinese companies made 154 overseas merger and acquisition deals worth $26.1 billion.

Luo Ying, a co-author of the study, said as China continues to internationalize, a growing number of Chinese companies are looking to gain market share, enhance their core capabilities, "capture new markets, and tap the skills of globally competitive leaders by engaging in outbound M&As".

Luo said they also view foreign deals as a way to obtain cutting-edge technology, gain overseas brands and management experience, and hedge against fluctuations in the Chinese economy.

Bright Food is already an active overseas buyer. It acquired a controlling 60 percent stake in 2011 in the United Kingdom's Weetabix Ltd, which owns the breakfast cereal brand as well as Alpen and Ready Brek, and bought Australian dairy company Mundella Foods at the start of last year.

It also owns 40 percent of New Zealand infant formula processor Synlait Milk, while Shanghai Maling, China's largest meat processor which is 38 percent owned by Bright Food, took a 50 percent share in New Zealand's leading meat processor Silver Ferm Farms this month, in a deal reported to be worth $261 million.