In its latest big buy, Charoen Pokphand Foods Plc (CPF), the SET-listed flagship of agribusiness giant Charoen Pokphand Group, has acquired Cofco Meat Suqian for 976 million baht.
Through Chia Tai China Investment Co (CTCI), an indirect subsidiary of CPF in China, CPF will also take over the shareholder's loans worth 2 billion baht.
CPF indirectly holds 50.43% of CTCI through CP China Investment Ltd, a wholly owned subsidiary of Hong Kong-listed C.P. Pokphand Co Ltd (CPP), of which CP is a part owner.
CTCI expects the acquisition to be completed by year-end. Upon completion of the acquisition, Cofco Suqian will become an indirect subsidiary of CPF.
According to a filing with the Stock Exchange of Thailand, the acquisition was agreed last Friday and will allow CPP to expand its agri-food business in China and further reinforce CPP's leading position in the industry.
Cofco Suqian, a company registered and incorporated in China in 2010, is principally engaged in poultry farming and the processing and sale of chicken meat products, mainly in the Yangtze River Delta.
It reported revenue last year of 3.35 billion baht for a net loss of 432 million baht. For the nine-month period ending Sept 30, Cofco Suqian posted revenue of 2.59 billion baht and a net profit of 37 million baht.
As of Dec 2, Cofco Suqian had capital of 596.29 million yuan.
The funding will be sourced from the cash flow of CPP.
The latest acquisition came shortly after CPF on Nov 17 acquired the entirety of Bellisio Parent LLC, a US frozen food firm, for US$1.08 billion. The transaction, subject to customary conditions and regulatory approval, is expected to close within 180 days. Upon finalising the transaction, Bellisio and its subsidiaries (together referred to as Bellisio Group) will become subsidiaries of CPF.
Founded in 1990, Bellisio Group is the third-largest maker and distributor of single-serve frozen entrees in the US, with household brands such as Michelina's, Boston Market, Chili's and Atkins.
Bellisio Group has deep strategic relationships with leading US retailers with over 50,000 distribution points.
Through its central production facility in Jackson, Ohio, Bellisio is able to distribute its products to more than half of the US within 24 hours and nationwide within 48 hours.
CPF can leverage Bellisio Group's nationwide distribution network and relationship with key retailers to distribute CPF's products.
By leveraging the strengths of both Bellisio Group and CPF, multiple opportunities are expected to be realised.
For example, expansion of retail distribution channels using CPF's relationship with key retailers and leveraging CPF's expertise and network in Asia and overseas will help to penetrate the Asian food segment.
In late October, CPF acquired a 70% stake in a Chinese poultry firm and invested in three new companies in Taiwan, China and Thailand, with a combined investment of 2.7 billion baht.
CPF shares closed yesterday on the SET at 29.25 baht, up 75 satang, in trade worth 70 million baht.