Thai CP Group to build China pork business through share swap

Conglomerate will acquire 43 operations, from breeding to food processing


Masayuki Yuda, Nikkei Asian Review (Japan)

September 14, 2020 


BANGKOK -- Top Thai conglomerate Charoen Pokphand Group will build a pork business in China that spans breeding to food processing in an attempt to combat a swine shortage caused by flooding and disease.


Chia Tai Investment, an indirect subsidiary of CP Group's food processing arm Charoen Pokphand Foods, will buy 43 businesses encompassing breeding, farming, slaughtering and food processing in a deal valued around 28 billion yuan ($4.1 billion).


Pork dishes are a fixture on Chinese dining tables. China was the world's largest swine market in 2019, at roughly $200 billion. But an epidemic of African swine fever and heavy flooding in Asia's largest economy have caused a supply shortage.


The seller, Chia Tai Animal Husbandry Investment, is an indirect wholly owned subsidiary of CP Group. Charoen Pokphand Foods, listed on the Stock Exchange of Thailand, will convene an extraordinary general shareholders meeting Oct. 27 to obtain approval.


CP Foods intends for the reorganization to bolster Chia Tai Investment's operations through access to China's pork market. The 43 transferred businesses have facilities in 22 Chinese provinces with a combined farming capacity of 7.2 million hogs yearly.


Chia Tai Investment already owns feed milling operations. Integrating it with these 43 businesses would let the group "better address market changes, leverage the know-how across the value chain and further expand its footprint in the future," CP Foods said.


The purchase will be done through allocation of new shares. Chia Tai Animal Husbandry Investment will receive...