The board of directors at seafood giant Thai Union has announced the company’s intention to pursue an exit from its minority investment in US restaurant chain Red Lobster.
Thai Union has been a strategic partner and minority investor in Red Lobster since 2016. But in an advisory issued to the Stock Exchange of Thailand on 16 January 2024, Thai Union President and CEO Thiraphong Chansiri explained that during the past years, the combination of Covid-19 pandemic, sustained industry headwinds, higher interest rates and rising material and labour costs have impacted the Red Lobster business, resulting in prolonged negative financial contributions and its shareholders.
In this regard, Thai Union and Red Lobster initiated a review of the letter to identify areas for operational and financial improvement.
“After detailed analysis, the board of directors has determined that Red Lobster’s ongoing financial requirements no longer align with our capital allocation priorities and therefore the company is pursuing an exit of the minority investment,” Chansiri said.
Thai Union recorded a share of loss of THB 700 million (US$ 19 million) in the first nine months of 2023 from Red Lobster. While it continues to explore available options for its exit, it will record a one-time estimated THB 18.5 billion (US$ 530 million) non-cash impairment charge for its whole investment in Red Lobster, which will be included in the group’s fourth-quarter 2023 earnings.
After impairment, Thai Union’s business and financial position remain strong with a low net debt/equity ratio of 0.84. To prove Thai Union’s strong financial position, the board has approved a share repurchase for financial management purposes not exceeding THB 3.6 billion or 200 million shares.
Thai Union is in the process of finalising its Corporate Strategy 2030, which will focus on its core business, centered around ambient seafood, frozen and pet care.
