* Bright Food in accord to buy 56 pct stake from Apax
* Deal values all of Tnuva at about $2.5 bln - source
* Israeli firm's cheese, expertise lure Chinese firm
(Adds consultant comments, industry details)
By Adam Jourdan and Tova Cohen
SHANGHAI/TEL AVIV May 22 (Reuters) - China's Bright Food Group Co Ltd
Under terms of a preliminary accord, Bright Food said on Thursday it will buy 56 percent of dairy firm Tnuva from private equity house Apax
The deal, the latest in a multi-billion dollar overseas acquisition spree by Bright Food, will give the Chinese firm access to both new cheeses and the Israeli firm's technological know-how in dairy production, trade sources and analysts said. Best known for its cottage cheese, Tel Aviv-based Tnuva booked 2013 revenue of 7.17 billion shekels ($2.05 billion) supplying a range of cheeses, as well as milk, yoghurt, meat and eggs.
The investment comes as increasingly affluent Chinese consumers opt to pay more for imported goods in the wake of safety scandals in local food supply chains, attracting the attention of global food giants as well as China's producers. The Chinese cheese market will be worth 2.7 billion yuan ($433.13 million) this year, doubling to 5.3 billion yuan by 2018, according to consultancy Euromonitor.
"China is still a niche market but there's lots of room for growth. We're getting increasing interest from international clients who are interested in China," said Matthieu David-Experton, Shanghai-based CEO at Daxue Consulting.
"The imported aspect is key because it makes it a more premium product in China and plays into the food safety trend," he said.
HIGH TECH
Mivtach has 10 days to decide if it wants to join Apax and sell its 21 percent stake to Bright Food, according to a source close to the deal. Apax declined to comment on details of the deal while a spokesman for Mivtach could not immediately be reached.
A group of kibbutzim, or cooperative farms, own the rest of Tnuva. Bright Food said it will look to strengthen cooperation with smaller shareholders, rather than buy them out, and hopes to close the deal by the end of the year.
As China's cheese market has developed, Bright Food has lost out. The country's dominant cheese producer with a quarter of the market by value in 2009, it dropped back to hold just 8.3 percent last year, according to Euromonitor data.
The deal could also give Bright Food access to Tnuva's dairy processing technology, increasing its dairy output, analysts said. Bright Food was China's fourth-biggest dairy producer last year by retail value.
"Israel is a country with highly developed agriculture and animal husbandry techniques. Tnuva, as Israel's largest food company, has a long history and various products and large market share," a Bright Food spokesman said in a text message sent to Reuters.
Bright Food has been making ripples globally in the past few years, with deals to buy Australian branded food business Manassen Foods and British breakfast cereal maker Weetabix valuing the firms at A$500 million ($460.85 million) and 1.2 billion pounds ($2.03 billion) respectively.
In January Bright Food bought Australian dairy company Mundella Foods, while other previous purchases include New Zealand's Synlait Milk Ltd
Bright Food owns four mainland-listed companies including Shanghai Jinfeng Wine Co
($1 = 3.4928 Israeli Shekels) ($1 = 6.2337 Chinese Yuan) ($1 = 1.0850 Australian Dollars) ($1 = 0.5925 British Pounds)
(Reporting by Tova Cohen in TEL AVIV and Adam Jourdan in SHANGHAI; Additional reporting by David Lin and Kazunori Takada in SHANGHAI; Editing by Andre Grenon and Kenneth Maxwell)
((tova.cohen@thomsonreuters.com)(+972-9-899-0222)(Reuters Messaging: tova.cohen.thomsonreuters.com@reuters.net))
Keywords: BRIGHT FOOD GRP TNUVA/APAX
