Indonesian food giant Indofood is to cut its stake in China Minzhong Food through a sale of an investment vehicle backed by the vegetable processor’s senior management.
Indofood will reduce its stake in China Minzhong Food from 82.33% to 29.94% through the sale of 347m shares.
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The shares will be sold to ChinaMinzhong Holding (CMZ), a vehicle owned by the Chinese vegetable processor’s CFO Siek Wei Ting, who holds the entire share capital in CMZ on trust for CEO Lin Guo Rong.
Proceeds will total S$416.4m (US$312m) and the transaction is expected to close in June, the company said in a regulatory filing.
Indofood said it was reducing its exposure to China Minzhong Food because the group requires “a longer time” to reach “targeted result”. The company did not comment on what these targets were when approached by just-food today (19 January).
Last year, China Minzhong Food’s revenue totalled CNY2.89bn, a decrease of 10.8% on 2013. During 2014 net profit fell 32.5% to CNY509.4m.
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By GlobalDataThe company said the drop in sales was mainly due to a decrease in fresh-packed product sales. In this category, “little product differentiation” means pricing is “the main determinant for regional orders”, China Minzhong Food said in its financial update. China’s fresh vegetable industry is “becoming increasingly less competitive as compared to other south-east Asia countries” due to food inflation, rising raw materials costs and higher wage costs in the country.
