Indofood expands into China

19 Februar, 2013

Jakarta-listed PT Indofood Sukses Makmur, one of the businesses owned by the Salim family, further strengthened its overseas business expansion by acquiring a 14.56 percent stake in a Chinese company.


Indofood said last week that it had signed an agreement to purchase 98 million new shares issued by the Minzhong Food Corporation (CMFC) Ltd., a leading integrated vegetable processor in China with cultivation, processing and sales capabilities.

Indofood acquired the shares, which account for 14.56 percent of the firm’s total shares, for 91.5 US cents per share or US$89.67 million in total.

“The aggregate consideration payable by the company [Indofood] for the subscription of the new shares is $89.67 million,” Indofood president director Anthoni Salim said in a written statement.

 “In line with our objective to continue pursuing growth, we are pleased with the commencement of the strategic alliance with CMFC. This initiative can provide further opportunities for both companies to expand their business in Indonesia and international markets by leveraging on each other’s strength,” Anthoni said.

The new stake in CMFC is one of Indofood’s latest overseas acquisitions. Its subsidiary Indofood Agri Resources Ltd. recently acquired a 50 percent stake in Brazilian sugar maker Companhia Mineira de Acucar e Alcool Participacoes (CMAA).

Indofood Agri said last January that the acquisition transaction worth $71.7 million was conducted through its Brazilian subsidiary, IndoAgri Brazil Participacoes Ltd.

The CMAA, which was founded in 2006, cultivates and processes sugarcane for the production and marketing of ethanol and sugar, as well as the generation of electricity from sugarcane bagasse. Currently, the CMAA operates one mill in Vale de Tijuco with a total crushing capacity of 3 million tons per year.

An analyst with PT Samuel Sekuritas Indonesia, Joseph Pangaribuan, said that Indofood’s expansion into Brazil and China was supported by the two countries’ promising demand on the back of good demographic profiles.

“Emerging markets offer the potential of high demand, which offers security in that the products are marketable,” Joseph said.

Both countries are now enjoying a demographic bonus with a large share of their populations being of working age.

Indofood corporate secretary Werianty Setiawan said the company would continue to maintain growth and increase the company’s value “by focusing on efforts to develop and strengthen core business as well as seek new opportunities”.

She declined to reveal whether the company would continue expanding in emerging markets. Shares in Indofood (INDF) closed at Rp 6,600 apiece on Monday, a 1.49 percent decline compared to last Friday.

 

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