China’s State Council has approved the merger of China National Cereals, Oils and Foodstuffs Corporation (COFCO) and Chinatex Corp, which specialises in edible oils and textiles, Reuters reported on 14 July.
Both companies are state-owned enterprises and the merger had been expected as part of the country’s efforts to improve the competitiveness of its state-owned sector, Reuters said.
On completion of the merger, Chinatex will become a subsidiary of COFCO, China’s largest food processer, manufacturer and trader.
Chinatex has two core businesses. Its textiles business covers the trading and manufacturing of cotton, wool, yarns, fabrics, home furnishing textiles and garments.
Its grains and oils business includes the trading, processing and warehousing of soyabean, corn, wheat, rapeseed, soyabean oil and palm oil.
According to Chinatex’s website, it is China's largest soyabean trader, one of the country’s largest edible oil traders and has one of China's largest edible oil extraction facilities.
It operates 10 oil extraction plants and two storage plants, with storage capacity totalling 500,000 tonnes and a crushing capacity of 22,000 tonnes/day or more than 600M tonnes/year, which makes it one of the top three domestic soyabean crushers.
Within edible oils, Chinatex has nine subsidiaries operating in Guangdong, Fujian, Liaoning and Sichuan provinces and two overseas subsidiaries in Brazil and the USA involved in oilseeds and oils purchasing.
COFCO has been focusing on global expansion. It completed its buy-out of the Noble Group’s agricultural unit in March 2016 (see OFI News, March/April 2016) to form COFCO Agri, which trades and processes a wide range of agricultural products including grains, oilseeds, sugar, cocoa, coffee and cotton. It also agreed to buy a 51% stake in Dutch trader Nidera in February 2014.