Thailand's Charoen Pokphand Foods to buy 74% in Hong Kong affiliate for $2.1 bn

Charoen Pokphand Foods Pcl, (CPF) Thailand's largest agribusiness group, yesterday agreed to acquire a controlling 74- per cent stake in its Hong Kong affiliate CP Pokphand Co Ltd, for 66.3 billion-baht ($2.1 billion).

The acquisition will give the Bangkok-based company access to agricultural businesses in China and Vietnam and make it a leading agricultural and food business company in Thailand with operations in 12 countries, over 3 billion customers and sales increase by at least 50 per cent.

CPF will buy 18.8 billion shares of CP Pokphand at 90 Hong Kong cents each from CP Group units.

It will issue new stock to CP Group and borrow $1.49 billion to fund the purchase.

CP Pokphand's Chinese operations mainly engage in feed business under the ''Chia Tai'' brand, a well known brand in China for more than 30 years. Its operations cover 28 provinces in China and its feed business contributed 95 per cent of total sales of CP Pokphand.

For the first 6 months of 2011, CP Pokphand posted profit of $64 million on revenue of $1.19 billion.

In Vietnam, CP Pokphand is a leader in integrated agricultural business and had sales of $648 million and net profit of $97 million in the first six months of 2011.

The acquisition will allow CPF to expand its business into China and Vietnam, where both countries have huge population and strong economic growth.

Adirek Sripratak, president and CEO of CPF, said, ''CPF is confident in high growth potential in agricultural business in China and Vietnam ……. CPF's sales for the first 6 months of 2011 would increase more than 50 per cent while net profit would increase more than by 20 per cent.''