A media report that trading house Itochu Corp was mulling a capital injection into Snow Brand Milk Products (SBMP) prompted a rebound in the troubled company’s shares earlier today [Thursday].
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Japan’s largest dairy manufacturer Snow Brand Milk Products (SBMP) has been hit by repeated scandals, the latest of which involved fraudulent meat labelling at its subsidiary Snow Brand Foods, and its shares has halved their value in a fortnight.
The company’s president Kohei Nishi unveiled a provisional recovery plan in a press conference on Tuesday, during which he suggested that SBMP could be looking for an outside alliance, including a capital injection, from either Nestlé Japan Holdings Ltd or Itochu.
According to the Mainichi Shimbun daily, an unnamed Itochu executive responded to the revelation by saying Itochu might extend its support to SBMP if asked.
In a related move, Japan’s agricultural ministry reportedly told SBMP that while it would not interfere in the management, it does not want the firm to form a capital alliance with a foreign company, because of the impact this could have on the struggling domestic dairy industry. Any outsider could discard the company’s beleaguered dairy operations, a worry that could prevent a move by Nestlé Japan Holdings, a wholly owned subsidiary of Swiss giant Nestlé.
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