China’s largest food processor and manufacturer, COFCO, plans to privatise its agricultural subsidiary, China Agri-Industries Holdings (CAIH), in a deal worth up to US$1.2bn, Reuters reported on 28 November.
COFCO said the move was due to the underperformance of CAIH’s share price, which had restricted its ability to raise funds to finance business development.
The underperformance was due to the uncertainty over the company’s development brought about by the slowdown of global economic growth, trade tensions and heightened geopolitical risks, Reuters wrote.
CAIH is a leading producer and supplier of processed agricultural products – including oilseeds, wheat and rice – in China. It is one of the largest producers of vegetable oil and oilseeds meals in China, processing mainly peanuts, rapeseed, soyabeans, palm and safflower oils. It is also involved in the storage, logistics, trade and distribution of related products.
The privatisation deal would be conducted via a so-called ‘scheme of arrangement’ in which scheme shareholders, who own 39.25% of CAIH, would be offered HK$4.25 (US$0.54) a share, just-food reported.
If no outstanding share options were exercised, the deal would be lowered to HK8.9bn (US$1.1bn).
Upon completion of the deal, COFCO would hold 100% of the shares of CAIH, which would apply to withdraw its share listing from the Hong Kong Stock Exchange, according to UK law firm Slaughter and May, which is advising COFCO.