January 20, 2005

Hong Kong Pacifoc Andes to buy 60% stake in Japanese seafood packer

Pacific Andes International Holdings Ltd., a Hong Kong-based fish and vegetable processor, said it will buy control of Japanese seafood packer Kyoshoku Co. for 400 million yen, or US$4 million, to gain direct market access in Japan.

In addition to cash payment for the 60 percent stake, Pacific Andes will arrange and guarantee bank financing for at least 1.4 billion yen for Kyoshoku, Pacific Andes said in a statement to Hong Kong's stock exchange.

`Prior to this investment, the group sold to the Japanese market through Japanese importers,'' the statement said. ``After this investment, the group can sell its products through Kyoshoku to consumers in Japan directly.''

The stock rose 4.8 percent to HK$1.31 at 10:46 a.m. in Hong Kong after a six-day suspension was dropped. Pacific Andes had several small acquisitions in the past year that expanded geographical coverage and product range. The stock is up 6.5 percent so far this year, compared with a 4.9 percent drop by the benchmark Hang Seng Index.

The company can save costs by shifting some Kyoshoku production to factories in China from three Japanese processing plants while sourcing for Japanese frozen seafood through Kyoshoku's network, the statement said.

Pacific Andes is buying the 60 percent stake in Kyoshoku from an investment partnership in which Sanyo Electric Co. has a stake, the statement said. The partnership will retain a 40 percent stake, it said.