Aussies fly in to snatch up Tegel

An Australian private investment fund which operates KFC stores across the Tasman will buy Tegel Foods from US parent Heinz.

Pacific Equity Partners (PEP) has agreed to buy the poultry company for an undisclosed sum.

Industry analysts originally put a value of about $380 million on the business, although there has been some speculation that fears about bird flu have been weighing on the sale price.

Tegel has revenue of about $400 million but its profits have been hit since it lost the contract to supply KFC outlets here.

PEP owns several food companies in Australia, including Collins Foods, which operates the KFC franchise across the Tasman.

With control of this country's biggest poultry company, PEP may now be tempted to make a move on Restaurant Brands - which owns the franchises for Starbucks and Pizza Hut as well as KFC.

In October, PEP managing director Simon Pillar said Restaurant Brands was one of the New Zealand investment opportunities it was considering.

"We are not talking now, but there is a possibility. It is in a sector we believe we will be able to add value," he said.

PEP has already proved it has the cash to buy Restaurant Brands.

Last month, it made a private bid of more than $2.2 billion for Goodman Fielder. Graeme Hart eventually rejected the bid and decided to go through with a public float.

Restaurant Brands has market capitalisation of just $121.3 million.

The sale of Tegel is part of a wider strategy by Heinz to offload underperforming businesses outside the United States.

The Pittsburgh-based company is also selling its European seafood and frozen food operations. It is understood to be seeking about $1.5 billion from all its unwanted food businesses.

Heinz acquired Tegel in 1992 as part of its deal to buy Goodman Fielder.