Category Archives: China Acquisitions Mergers

Accolade spreads its wings in China

Source: Adelaide Now By Nigel Austin

SOUTH Australian-based Accolade Wines has bought a majority stake in the Shanghai distribution business Shanghai CWC Wine Trading Co Ltd.

Accolade chief executive Troy Christensen said the purchase would provide a springboard for Accolade’s expansion into the fast-growing Chinese market.

Mr Christensen said it had an established relationship with the business which has been distributing Accolade’s wines in China and Mongolia for many years.

“We will now be in a position to extend our presence in the market,” Mr Christensen said.

Accolade’s commercial general manager, Asia, Freddie Choong said its offices in Shanghai and Beijing would provide a solid platform from which to rapidly build its market position.

“Accolade Wines has an unparallelled range of brands and wines with labels showcasing Australian, South African, Californian and New Zealand brands,” Mr Choong said.

“As Chinese wine consumers are now rapidly exploring the world of wine, this acquisition ensures we are well placed to provide an exciting suite of wines from icons through to premium and commercial wines.”

Shanghai CWC shareholders including manager Bong Ha will retain a minority stake in the company and he will continue to manage the business.

Mr Ha said Accolade’s diverse wine portfolio from multiple geographies and outstanding wine-making expertise meant the company had the capacity to not only offer its existing wines to Chinese consumers but to develop wines specifically for the Chinese market.

Accolade Wines is a global wine company with some of the world’s best known brands including the historic Hardys brand, which are sold in more than 80 countries.

Shareholders in Chinese hot pot chain approve Yum! takeover proposal

Source: Xinhua | Photo: Want China Times

GUANGZHOU, Jan. 7 (Xinhua) — Shareholders of China’s leading domestic hot pot chain, Little Sheep Group Ltd. (Little Sheep), have approved a takeover proposal by Yum! Brands Inc. (Yum!), Yum! said in a press release on Friday.

Under the proposal, Yum! will offer Little Sheep independent shareholders 6.50 HK dollars (0.837 U.S. dollar) per share, and will offer holders of options to subscribe to Little Sheep 4.39 HK dollars per option to cancel these options.

Yum! will proceed with its takeover process by seeking the sanction of the Grand Court of the Cayman Islands at a petition hearing on Jan. 20.

The arrangement is expected to go into effect on Feb. 1, when Little Sheep will be privatized and become a Yum! subsidiary, the press release said.

China’s Ministry of Commerce in November 2011 approved Yum!’s proposed takeover of Little Sheep, which is listed in Hong Kong.

Louisville, Kentucky-based Yum!, which owns KFC and Pizza Hut, bought a 20-percent stake in Little Sheep in 2009 and raised its shareholding to 27.2 percent last year.

“We are pleased to see that the independent Little Sheep shareholders value the offer provided by Yum!,” Jing-Shyh Sam Su, chairman and CEO of Yum! Restaurants China and vice president of Yum!, said in the press release.

Hot pot is a traditional Chinese meal that people enjoy by sitting around a fondue-like pot of simmering water, dipping raw foods, such as thinly-sliced meats, fish, vegetables, and noodles, into the water to cook. Hot pot is a signature New Year’s dish for many Chinese families both in and outside of China.

“We have a strong commitment to the China market and to the Little Sheep brand. We are confident we can further strengthen Little Sheep’s brand, business model and market position,” he said.

The China Cuisine Association rated Yum! and Little Sheep as the top two market players in 2010.

Little Sheep, which focuses on hot pot, operates 3,000 restaurants throughout China and reports an annual revenue of 2 billion yuan (about 315 million U.S. dollars).

Meanwhile, Yum! has nearly 3,500 KFC restaurants and about 560 Pizza Hut restaurants in China. Last year, the company’s China division reported 33.6 billion yuan in revenue.

Shaanxi Haisheng Eyes Global Expansion

Source: By Ding Qingfen (China Daily)

BEIJING – Shaanxi Haisheng Fresh Fruit Co Ltd, the largest producer of apple-juice concentrate in the world, is planning to buy fruit orchards in the United States and Canada to expand its presence overseas, said a company official.

“It (the purchasing plan) is part of our strategic business transformation,” said Li Rong, director of capital operations of the company. “We are looking for possible opportunities to use mergers and acquisitions to own fruit plantations in North America. And we aren’t excluding opportunities to work on deals involving fruit-juice processing and distribution overseas if they are good enough,” she said, declining to elaborate.

Nearly 15 years after Haisheng was established, the company was capable in 2010 of churning out 405,000 tons of apple-juice concentrate. That feat came following a series of investments in expansion at home and abroad, making the company the largest processor and provider of the concentrate.

In 2010, Haisheng’s annual exports accounted for 25 percent of the nation’s total exports and 25 percent of world trade in apple-juice concentrate.

Among its current clients are some of the best known companies in China and abroad: China Huiyuan Juice Group Ltd, the largest juice maker in China, Pepsico Inc and Coca-Cola Co, the largest beverage producers in the world.

In 2005, Haisheng was listed on the Hong Kong Stock Exchange.

“While we have gained a firm foothold in the global market, we are preparing for a strategic business transformation,” she said. “The first step will be to develop the industrial upper chain through merger and acquisition deals overseas.

“We are discussing buying fruit orchards in the US and Canada.”

Haisheng already has a strong presence in the US. The company set up a sales office there in 1998 and has become the largest provider of apple-juice concentrate in the American market, supplying 30 percent of the country’s demand for juice.

“Now is a good time for us to develop our upstream business in North America, where the land is fertile and comparatively cheap,” Li said.

Haisheng has a strong presence in other countries as well. It supplies 9 percent of the Europe Union’s demand for juice, 46 percent of South Africa’s and 29 percent of Russia’s.

“We will also see if there are opportunities to expand overseas in the processing and distribution of fruit juice,” she said.

The company has been trying to expand through acquisitions.

In 2010, Haisheng acquired Yitian Group, the China-based juice business of Japan’s Itochu Corp, for $10.38 million

Under the agreement, Itochu will help Haisheng sell and distribute fruit juice products in Japan. The acquisition is expected to help Haisheng’s production capacity increase by 15 percent, and the Chinese provider’s market share in Japan is expected to increase to 40 percent from 8 percent.

Despite those successful acquisitions, Chinese companies still face difficulties in acquiring land overseas.

The government of Iceland recently rejected a proposal from the Chinese billionaire investor Huang Nubo, who wanted to buy 300 square kilometers of land on the northern part of the island for $200 million.

Explaining its rejection, the government said such a transfer of property would be “incompatible” with the country’s laws.

Kobe Steel to form aluminum joint venture in China

Source: Steel Guru

Kobe Steel, Ltd. has tied up with Jiangsu ALCHA Aluminium Co Ltd a major producer of aluminum rolled products in China, to expand its aluminum business in China. Kobe Steel and ALCHA have signed a letter of intent to establish a joint venture in Baotou, Inner Mongolia to produce and sell aluminum coil and sheet. After conducting a detailed feasibility study, both companies plan to sign the final agreement in spring 2012.

The joint venture, which is planned to be established in January 2013, is envisaged to be 80% owned by Kobe Steel and 20% by ALCHA. Capital investment is earmarked at approximately JPY 40 billion. The company will produce and sell mainly aluminum coil and sheet for automobiles and beverage cans. Production capacity at the joint venture will be approximately 200,000 tonnes per year. While the company name is yet to be decided, the operation will be capitalized at CNY 2 billion. Start up of operations is anticipated in 2015.

With demand for aluminum sheet in China rapidly increasing in recent years, Japanese, US and European customers have accelerated their push into the Chinese market. Demand for aluminum sheet for automobiles and beverage cans, which are major products at Kobe Steel, is anticipated to grow sharply in the coming years. But only a limited number of manufacturers in China can currently make these products as advanced production technology is required. To meet these needs, Kobe Steel and ALCHA plan to develop the market mainly for automotive aluminum sheet and can stock in China.

The new joint venture will produce the same high quality aluminum sheet available in Japan in an integrated operation, from melting and casting to hot rolling and cold rolling. In the hot-rolling and cold-rolling stages, the joint venture plans to install state-of-the-art equipment to produce some of the world’s largest aluminum coils. In addition, Baotou in Inner Mongolia, where the plant will be constructed, is close to abundant energy resources and has a good workforce. These factors will give the joint venture a competitive edge.

Listed on the Shenzhen Stock Exchange, ALCHA is a major manufacturer of aluminum rolled products with an established business foundation. The partner companies are working on starting up the joint venture, with ALCHA assisting in equipment procurement and permitting. From this beginning, Kobe Steel and ALCHA plan to continue discussions to deepen their future alliance.

Profile of the Joint Venture
Name To be decided
Location Baotou, Inner Mongolia
Establishment Planned for January 2013
President To be decided (will be dispatched from Kobe Steel)
Capital 2 billion RMB (about 24 billion yen)
Equity share Kobe Steel 80%, ALCHA 20%
Capital investment Approximately 40 billion yen
Business activities Production and sale of aluminum sheet
Annual capacity 200,000 metric tons
Start-up Planned for 2015

Profile of ALCHA
Name Jiangsu ALCHA Aluminium Co., Ltd
Established Dec-02
Location Changshu, Jiangsu Province
President Zhang Ping
Capital 340 million RMB
Major shareholder Changshu Aluminium Foil Factory 39%
Business Production and sale of aluminum foil, sheet, coil and strip
Sales 1,949 million RMB (in 2010)
Employees 674 (at the end of June 20111)

China approves Nestle’s candy maker purchase

Source: Reuters By Aileen Wang and Don Durfee

(Reuters) – Singapore-listed Chinese candy maker Hsu Fu Chi International (HSFU.SI) said on Wednesday that China’s commerce ministry had approved Nestle’s plan to purchase a 60 percent stake in the company, easing concerns that Beijing will take a hard line toward foreign companies buying well-known local brands.

In July, Nestle (NESN.VX), the world’s largest food company, offered to pay $1.7 billion for the stake in Hsu Fu Chi as part of its plan to further tap the Chinese market.

Hsu Fu Chi, which makes sugar sweets, cereal-based snacks, cakes and the traditional Chinese snack sachima, is listed in Singapore and reported sales of 669 million Swiss francs ($722 million) in 2010. It employs 16,000 people.

The deal, Nestle’s biggest in China, brings it closer to its target of 45 percent of sales from emerging markets in about 10 years.

After the failure in 2009 of Coca-Cola Co’s (KO.N) $2.4 billion bid for Chinese juice producer China Huiyuan Juice Group Ltd (1886.HK), rejected by the government on competition concerns, lawyers and bankers have speculated that Beijing would seek to protect local brands from overseas buyers.

Wednesday’s approval of the Nestle-Hsu Fu Chi deal suggests that’s not the case, said Frank Schoneveld, a partner at the McDermott, Will & Emery law firm in Shanghai.

“There had been a concern that if you were doing a transaction that involves a popular Chinese brand it would be difficult to get that through. This deal, together with the earlier Yum Brands-Little Sheep transaction, shows that’s not the case,” said Schoneveld.

China’s Ministry of Commerce approved Yum Brands’ (YUM.N) takeover of Little Sheep Group Ltd (0968.HK) in November.

DELISTING FROM SINGAPORE

A spokeswoman for Hsu Fu Chi told Reuters that the company was not awaiting approval from other Chinese regulators, and expected that courts in the Cayman Islands, where the company is registered, would soon approve its delisting from the Singapore Stock Exchange.

The transaction should close by the end of December, she added.

Under their agreement, Nestle will buy 43.5 percent of Hsu Fu Chi’s shares from independent shareholders at S$4.35 a share, a premium of 8.7 percent over the July 1 closing price. Trading of the Dongguan-based company’s shares was halted on July 1 when the companies said they were in talks.

($1 = 0.9272 Swiss francs)

Noodle Maker Tingyi Said to Hire Deutsche Bank for Loan

Source: Bloomberg News By Wendy Mock | Photo: China Daily 

Tingyi (Cayman Islands) Holding Corp., the instant noodle maker which agreed to be PepsiCo Inc.’s bottler in China, hired Deutsche Bank AG to advise on an about $150 million loan, according to two people familiar with the matter.

Cathay United Bank Co. is helping to arrange the three-year facility, which is being marketed primarily to lenders in Taiwan, said the people who declined to be identified as details are private. The loan has a margin of about 95 basis points over the London interbank offered rate, and proceeds will be used for capital expenditure and general corporate purposes, the people said.

Deutsche Bank has advised on, instead of arranged, loans in Taiwan previously, that model being part of the bank’s strategy in the region, one of the people said. The German lender advised on a $262 million facility for Export-Import Bank of Korea last year which was arranged by Taiwan Cooperative Bank.

Hong Kong-listed Tingyi sells instant noodles, ready-to- drink tea and baked goods under the brand name Master Kong. It’s China’s largest maker of packaged food.

PepsiCo Swap

Net income fell to $131 million in the three months through September from $200.5 million a year earlier, Tingyi said in a Nov. 14 filing. Colder weather in southern China hurt demand for its drinks while prices for raw materials rose, Tingyi said.

Tingyi is expanding into new markets to boost sales and agreed to swap a stake in its beverage business for PepsiCo’s bottling operations in China. In exchange, PepsiCo will receive 5 percent of Tingyi-Asahi Beverages Holding Co., with an option to increase the stake to 20 percent by October 2015. Tingyi will also make, sell and distribute PepsiCo’s carbonated soft-drink and Gatorade brands, and co-brand its juice products under the Tropicana label.

Nestle finishes acquisition of 60% stake in Yinlu

Source: Xinhua

Xiamen, Nov. 17 (Xinhua) — Swiss food giant Nestle SA Thursday (November 17) officially finished the acquisition of a 60 percent stake in China’s Yinlu Foods Group.

At a ceremony in the southeastern city of Xiamen, home to the headquarters of Yinlu, the two also announced they will jointly invest 2.5 billion yuan (394 million U.S. dollars) in Yinlu to expand current and build new production facilities nationwide.

Chen Qingyuan, chairman of Yinlu, said the company will seek the help of Nestle to make Yinlu an international brand and to expand into the international market.

Roland Decorvet, chairman and CEO of Nestle China, said Yinlu has a very good understanding of the tastes of Chinese consumers and the Chinese market and also has very extensive distribution and sales network, while Nestle has rich experience in fields like research and development and management.

The two declined to disclose the price of the acquisition.

Yinlu, known for its peanut milk and instant porridge products, reported a revenue of 5.4 billion yuan in 2010, up 52.5 percent from a year ago.