CP Foods to build on China swine business after merger
BANGKOK, NNA - Charoen Pokphand Foods PCL (CP Foods) will acquire 43 companies involved in the swine business from Chia Tai Animal Husbandry Investment (Beijing) Co., a leading pig producer in China, under a proposed merger deal.
If approved by shareholders in October, it will help CP Foods to grow the lucrative pork trade further. The company will also benefit from the integration of businesses covering the whole spectrum, from producing feed and pig farming to slaughter and processing.
The board of directors of CP Foods have given the greenlight to Chia Tai Investment Co., (CTI), a subsidiary of CP Foods, to take over Chia Tai Animal Husbandry Investment, a subsidiary of its parent company, Charoen Pokphand Group.
The deal is worth 131.28 billion baht ($4.2 billion). CTI, whose main business is feed production and distribution, will issue new shares as payment to Chia Tai Animal Husbandry.
“With a rising demand and shortage in supply of hogs, the swine business in the People’s Republic of China is an attractive market,” CP Foods said in a filing to the Stock Exchange of Thailand on Monday.
China is the world’s largest pig market. Worth $200 billion, it notched an average growth of 8.3 percent yearly from 2010 to 2019, according to China’s National Statistical Office.
This will benefit C.P. Pokphand Co., (CPP), which manufactures and sells animal feed in China. CTI is an indirect subsidiary of CP Foods via C.P. Pokphand, a company listed on Hong Kong Stock Exchange.
The merger would allow businesses across 22 provinces under its umbrella to better address market changes and further expand their footprint in future, said CP Foods.
In the midst of the ongoing coronavirus pandemic, the company noted that the demand for pork products from domestic as well as Asia markets had risen.
Q2 profit was 18 percent higher, due mainly to a hike in swine price following an outbreak of African Swine Fever (ASF), according to its statement.
To expand its global presence, the company acquired Canadian pork producer Hylife Investments for 11.9 billion baht in 2019 in a joint venture with Japanese company Itochu Corp. It also invested 3.15 billion baht for an 83 percent stake in Russia Baltic Pork Invest ASA (RBPI) in 2013.
The CP Group is a major conglomerate in Thailand. Apart from agriculture, chicken and meat businesses, it also deals in consumer products, telecommunication and convenience stores.