Bright Food Said to Work With Citigroup on Tnuva Acquisition

Bright Food Group Co., the dairy and consumer-products group backed by the Shanghai government, is working with Citigroup Inc. (C) on its planned purchase of Israel’s Tnuva Food Industries Ltd., according to a person with knowledge of the matter.

A deal could value Tnuva, Israel’s largest food manufacturer and distributor, at as much as 9 billion shekels ($2.6 billion), said the person, who asked not to be identified as the information is private. Bright Food is performing due diligence on Tnuva, the person said.

Chinese companies from Bright Food to pork producer WH Group Ltd. have been making acquisitions overseas as rising incomes spur demand for consumer goods. Bright Food, whose domestic brands include White Rabbit candy, bought a 60 percent stake last year in British cereal maker Weetabix Ltd. for $1.2 billion.

Tnuva could still consider an initial public offering if no agreement is reached with Shanghai-based Bright Food, according to the person. Spokesmen at Tnuva and Citigroup in Israel declined to comment. Mivtach Shamir Holdings Ltd. (MISH), which has a stake in the Israeli food maker, advanced 1.1 percent to 128.4 shekels at today’s close in Tel Aviv.

Bright Food has not decided on any acquisition for Tnuva and hasn’t set a valuation for the company, Shanghai-based spokesman Pan Jianjun said in a telephone interview today. Citigroup is among several investment banks Bright Food works with when making overseas acquisitions, Pan said.

Rothschild advised Bright Food on the Weetabix deal, data compiled by Bloomberg show.

Tnuva owns seven of the 10 most-known food brands in Israel and accounts for more than 14 percent of shelf space in the country’s supermarkets, according to the website of private-equity firm Apax Partners LLP, which invested in the company.

Tnuva was formed more than 80 years ago as an agricultural cooperative of 620 farming communities across the country, who were also the company’s suppliers of raw milk and produce, according to Apax. Members of the co-operative in 2007 approved the sale of a majority stake in Tnuva to Apax at a price that valued the company at $1.03 billion at the time.

WH Group -- previously known as Shuanghui International Holdings Ltd. -- acquired Smithfield Foods Inc., the world’s largest hog producer, for about $4.7 billion last year in the biggest Chinese acquisition in the U.S.

To contact the reporters on this story: Shoshanna Solomon in Tel Aviv at ssolomon22@bloomberg.net; Zijing Wu in Hong Kong at zwu17@bloomberg.net

To contact the editor responsible for this story: Philip Lagerkranser at lagerkranser@bloomberg.net

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