January 4, 2013

Charoen Pokphand Foods Plc (CPF) intends to acquire Chinese manufacturer and distributor of meat products Chia Tai Food Enterprise for US$15.8 million.

The transaction to acquire 100% equity in Qinhuangdao, China-based Chia Tai Food Enterprise was made through CP China Investment Ltd (CPCI), a wholly owned subsidiary of CPF. Chia Tai Food Enterprise is being sold by Chia Tai Food Investment (CTFI), itself a subsidiary of the Charoen Pokphand Group (CPG), which is a major shareholder of CPF.

'CPF's cash flow will be used to fund the transaction.

CPF disclosed that the board of directors considers the transaction favourable because it will enable the firm to get involved in the manufacture and distribution of processed food and ready meals in China, as well as improve the group's opportunities to transform itself into a leader in the food business in that country, where processed food and ready meals possess high growth potential.

The acquisition will let CPCI start getting engaged in the food business in China, and it will take one to two years for the building of a processing plant to be completed, according to MayBank Kim Eng Securities.

Operations are set to begin in 2014.