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Dhanin Chearavanont, Chairman and CEO of Charoen Pokphand Group. (Photo: Stock File)
Itochu settles strategic agreement with Thai group
(JAPAN, 7/25/2014)
Itochu Corporation has agreed and executed a strategic alliance agreement with one of Asia’s leading Agriculture-based conglomerate company Charoen Pokphand Group Company Limited (CPG) with the aim of deepening mutual cooperation and maximizing corporate value with their corporate group.
This agreement, subsequent to the approval of Itochu board of directors, will combine the firm's strengths as one of the top class trading houses in the non-resource business, and CPG’s strong network and wide recognition to further expand and strengthen its foothold in the non-resource sector in Asia, and elsewhere.
In addition, both firms will bring together the sourcing, sales, and information capabilities of each group to realize the synergistic benefits as in increase of sales, improvement of product competitiveness, and development of new markets in the Asian region.
According to this agreement, both firms have decided to jointly develop opportunities for business expansion in the non-resource sector, including but not limited to food, chemicals, information communication technology, finance and other areas, mainly in Asian regions.
Furthermore, they have also agreed on the promotion of joint initiatives in the areas of feed, livestock and marine product related business, mainly in Asian regions such as Thailand, China and Vietnam, as well as the establishment of systems for supplying raw materials to those regions.
As to the content of the capital participation, Itochu will make a 25 per cent investment in C.P. Pokphand Co. Ltd., a subsidiary of Charoen Pokphand Foods Public Company Limited, which is engaged in feed, livestock and aqua product related business in China and Vietnam. The consideration for the investment is expected to be approximately JPY 87 billion (USD 857 million).
"CPP's main businesses are in China, so our main target through this alliance is China," Itochu senior managing executive officer told reporters.
The allotment of a total of approximately 4.9 per cent (before third party allotment of shares) of Itochu shares to a wholly owned subsidiary of CPG, and a joint venture between a wholly owned subsidiary of CPG and the Development Bank of Japan has also been agreed.
News sources informed that CP Pokphand shares have risen 25 per cent in Hong Kong trading since the start of the year, outpacing the 3.3 per cent gain in the benchmark Hang Seng Index. Its first-quarter profit jumped 38 per cent to USD 41.4 million. Revenue for the period rose 5.5 per cent to USD 1.25 billion.
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Room 501, 5/F, NO.2 Office Building, China Central Place, No.79, Jian Guo Road, Chaoyang District
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(100025)
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China
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