The buyout is the latest example of what has been a rapid consolidation of the global seafood industry, a response to changing consumer demands and fluctuating costs, according to analysts.
The newly merged company would house two of the three most recognizable—and consumed—canned tuna brands in the country: Chicken of the Sea, which Thai Union already owns, and now Bumble Bee. Together, the two account for 38 percent of U.S. canned tuna sales, a shade more than Starkist, whose 36 percent market share is currently the highest. Starkist was bought out in 2008 for $363 million by South Korea's Dongwon Industries Co. Ltd.
"The deal is the largest acquisition in the history of our company and one of the most exciting external growth propositions," Thiraphong Chansiri, Thai Union president and chief executive, said in a statement.
The Thai canned seafood company had previously told investors that it was setting its sights on a lofty sales goal: reaching $8 billion in revenue by 2020. Merging with Bumble Bee would without question help jumpstart that process. Bumble Bee's annual sales, which total about $1 billion, would boost the merged company's total to roughly $5 billion.
The deal, though agreed upon by both Thai Union and private-equity firm Lion Capital, which owns Bumble Bee, could face significant scrutiny from antitrust authorities. The canned tuna industry is already top heavy, and this merger might put too much of the industry's sales in two players' hands.
"This potential merger will raise concerns with U.S. regulators," Jeffrey Jacobovitz, an antitrust expert at Arnall Golden Gregory LLP, told Reuters. "I don't think this merger would breeze through."
There is speculation that in order to make the deal work, the newly merged company might have to sell off some of its assets, possibly one of Bumble Bees subsidiary brands, like Brunswick or Sweet Sue.
"This combination is good news for our customers, consumers and the industry as a whole," Chris Lischewski, chief executive of Bumble Bee Seafoods, said in a statement.
News of the sale comes at a particularly difficult time for canned tuna producers—especially those dependent on the U.S. market. Fears of mercury levels found in the fish, news of dolphin bycatch, a growing distaste for cans in general, and rising tuna prices have all contributed to a newreality: Americans have been eating less canned tuna almost every year for quite some time. Canned tuna consumption per capita is down more than 30 percent in the country over the past two decades.
In 2012, canned tuna was responsible for just over 16 percent of all U.S. fish and seafood consumption in the country, the lowest reading in nearly 60 years.
The silver lining for the industry? Americans might be eating less canned tuna, but they're eating more expensive canned tuna that's pricey enough to compensate for the the country's shrinking appetite. The fall-out in purchases of actual pounds of canned seafood hasn't been commensurate with the change in dollar sales, which have actually been growing at a modest clip — and are expected to continue to grow through at least 2018.