SINGAPORE (June 28): Del Monte Pacific and the company of a similar name which it has long been in a legal tussle with, Fresh Del Monte Produce, have made peace and instead, joined forces to announce a series of new joint ventures (JVs) in retail and refrigerated grocery products.

This includes a joint initiative introducing Del Monte branded retail outlets, which feature an assortment of nutritious foods and beverages to meet the increasing demands of consumers for healthier food options.

In a release filed Wednesday morning, the companies express the belief that the joint ventures will result in expanded refrigerated offerings sold across all distribution and sales channels, and a new retail food and beverage concept modelled after an already-successful Fresh Del Monte Produce business in the Middle East.

These joint ventures will initially focus on the US market with the potential for expansion into other territories where the companies’ businesses complement each other – which will, in the process, greatly increase the scale of the Del Monte® brand by expanding into more high-quality, healthy and convenient product options for consumers, they add.

Further, Del Monte Pacific and Fresh Del Monte Produce say they are collaborating on several product innovations for new food and beverage products.

They have also agreed to a long-term mutual supply agreement to accelerate the expansion of Del Monte product sales in various markets around the world.

“We are pleased that we have resolved our differences and put to rest the financial uncertainty that can arise from prolonged litigation,” said Rolando C. Gapud, chairman of the board of Del Monte Pacific.

“We look forward to combining the resources of Del Monte Pacific, our US subsidiary Del Monte Foods, and Fresh Del Monte Produce, and focusing our joint efforts on exciting new business opportunities that will provide consumers with more premium quality, healthy products.”

Del Monte Pacific is dual listed on the Singapore and Philippine stock exchanges and is 67%-owned by NutriAsia Pacific and Bluebell Group Holdings Limited, which are beneficially owned by the Campos family of the Philippines.

On the other hand, Fresh Del Monte is a producer, marketer and distributor of fresh and fresh-cut fruit and vegetables as well as prepared food in Europe, Africa, the Middle East, and the countries formerly part of the Soviet Union.

The two food giants are known to have been engaged in a long-standing litigation which centred on licensing rights and product distribution in various territories around the world. They have since reached a full and final settlement of all litigation.

While DBS Vickers Securities is positive on the news, the research house sees limited near-term contributions to the Del Monte Pacific's earnings due to a lack of details.

The counter has hence been given a "hold" rating with a target price estimate of 36 cents.

"Our initial take is that contributions from the new JVs are likely to be limited to Del Monte Pacific in the near term," say analysts Andy Sim and Alfie Yeo in a note on Thursday, post the companies' joint announcement.

"Over the longer term, this could be positive for [the group] in its expanded product offerings, and help to mitigate declining sales in the canned food category. With the JVs, we believe this could help in removing overhang for products such as refrigerated fruit/snack cups which borders along the interpretation on whether it is fresh or packaged," they add.

As at 3.04pm, shares in Del Monte Pacific are trading 1.5% higher at 34 cents.