* Sigma says has commitments from 44.5 pct of Campofrio
* Launches full bid worth 695 million euros
* Acceptance from major shareholder Shuanghui key
* Campofrio shares jump 11 percent to 6.83 euros
By Tracy Rucinski
MADRID, Nov 14 Mexican frozen food company Sigma
Alimentos has launched a 695 million euro ($932 million)
takeover bid for Spanish meat processor Campofrio at a
price analysts said could tempt its leading shareholder to sell.
Sigma said on Thursday it had secured commitments from
shareholders with 44.5 percent of Campofrio - a household name
in Spain - meaning that it now needs to persuade China's
Shuanghui International Holdings to part with its 37
percent stake in the firm.
Analysts said that Sigma's offer of 6.8 euros per share - a
10.6 percent premium to Wednesday's close - was only in line
with the sector average, an EV/EBITDA ratio of about 6.0, but
could be enough to win acceptance from Shuanghui.
Shuangui inherited its Campofrio stake when it bought U.S.
pork producer Smithfield Foods for $4.7 billion earlier this
year. It said in September it planned to reduce the holding to
less than 30 percent by December - a move interpreted as
bypassing a Spanish legal requirement to launch a bid and
gaining time to consider its options.
Bankers said it seemed unlikely the Chinese group would want
to hold on to Campofrio given that its products - which include
hot dogs and canned ham - have little appeal for Chinese
Other industry sources have suggested Shuanghui is more
likely to be focused near term on integrating Smithfield rather
than taking over Campofrio.
Sigma's offer represents a 24 percent premium to the 5.5
euros per share at which Campofrio was trading when Shuanghui
announced its intention to reduce its stake.
A Hong Kong-based spokeswoman for Shuanghui International
declined to comment on the matter.
Even if Shuanghui rejects the offer, Sigma may be able to
woo minority shareholders to accept the bid and give it a
majority stake above 50 percent, analysts said.
Campofrio shares jumped 11 percent to 6.83 euros, just above
the bid price.
CROSSING THE ATLANTIC
Sigma's bid for Campofrio would allow the firm to expand its
footprint from Mexico, where it sells well-known brands such as
Fud and Nochebuena, the United States, Central and South America
into Europe, where Campofrio is a major player.
After a drawn-out economic crisis during which foreign
investors shunned Spanish assets, a number of overseas buyers
are starting to close deals in Spain, drawn by bargains and the
country's exit from five years of stop-and-go recession.
Sigma, part of Mexican conglomerate Alfa's, said
its takeover bid follows an agreement to buy 44.5 percent of
Campofrio from shareholders Oaktree Capital, lender La
Caixa and Chairman Pedro Ballve for an undisclosed price.
Oaktree, with 24.25 percent of Campofrio, was considered a
potential seller at the right price, while bank La Caixa, with
4.17 percent, needs to sell assets to shore up finances.
Meanwhile, Sigma has offered to keep Ballve, who is selling
his own 12.4 percent stake in the company and publicly backing
the takeover bid, as Campofrio chief as well as chairman of the
wider Sigma group for the next five years.
As part of the agreement, Ballve will also receive financing
from the Mexican group to buy back his stake once the takeover
Campofrio posted underlying core profit of 100 million euros
in the nine months to Sept 30, down 3.7 percent from a year
earlier due to higher raw material costs.