Family owned Thai conglomerate Charoen Pokphand Foods this week announced the acquisition of CP Pokphand Co (CPP) in Hong Kong as part of its strategy to move from the top seven to one of the world’s top three animal-feed producers with production of aquafeed and poultry feed set to reach 20 million tonnes a year.
The acquisition will cost US$2.17 billion to purchase a 74.18 per cent stake from Orient Success International, Worth Access Trading and CPI Holding, three companies are owned by the Cheravanont family under the Charoen Pokphand Group (CPG).
Animal feed represents up to 95 per cent of CPP's business. CPP's feed products include swine feed, broiler feed, duck feed, cattle feed, fish feed, shrimp feed, manufactured under the Chia Tai brand name and sold in 28 Chinese provinces.
The company is the leader in integrated fam operations in Vietnam through its CP Viet Nam Corporation (CPV). CPV operates four livestock feed mills and three aquafeed mills.
Adirek Sripratak, president and chief executive officer of Charoen Pokphand Foods, said that the strategy was to encourage CPF to restructure its business in the region to achieve synergy, security and cost competitiveness.
"CPF is to spearhead exploring business opportunities overseas by itself rather than relying on its subsidiaries. The strategy will strengthen the company's bargaining power with trading partners," Adirek said, adding that this restructuring was similar to what CPF had done in 1999 to consolidate all related subsidiaries into branches of CPF. Adirek added that the company had to lower this year's total sales target a little from Bt220 billion to Bt210 billion because of the flooding. However, sales are still set to grow by 10-15 per cent next year.