Petra Foods expected to acquire more regional brands

Better than growing current brands organically.

Flush with cash after receiving estimated net proceeds of US$164m from the sale of its Cocoa Ingredients division in FY13, Petra Foods could opt for a brand-buying spree, according to OCBC Investment Research.

"Though there is an arbitration to reduce the closing price by US$98m, the proceeds would still be a sizable war chest. We think Petra Foods is likely to acquire brands to penetrate further into regional markets rather than growing its existing brands organically," said OCBC.

The research firm said the strategy is nothing new to Petra Foods, and it could just repeat what it did to break into the Philippine market.

"Back in 2006, Petra Foods acquired the chocolate confectionery manufacturing plant and sales and distribution assets from Nestle Philippines’ Inc and its subsidiary. The key prizes are, in our opinion, the popular local brands “Knick Knacks” and “Goya” that jumpstarted Petra Foods’ penetration into the Philippines market."