COFCO Int'l surges on plan to buy assets

Food processing company COFCO International Ltd said it would buy HK$5.3 billion (US$680 million) worth of assets from its parent and proposed spinning off its agri-industrial business on the Hong Kong exchange, helping push up its shares as much as 16.5 per cent.
COFCO International said in a statement on Monday it would buy the food and beverage business and agri-industrial business, which includes biofuel and grain processing operations, from its controlling shareholder COFCO (Hong Kong) Ltd, a unit of state-owned China National Cereals, Oils & Foodstuffs Corp.
The firm to be spun-off, China Agri Group, had first-half earnings of HK$315.1 million on turnover of HK$8.67 billion.
Hong Kong-listed COFCO International said it would finance HK$4.6 billion of the purchase by issuing 879.7 million new shares at HK$5.25 each, and the remaining HK$715 million would be settled by the transfer of non-core assets, including business consultancy, thermal power generation, logistics and seafood trading businesses, to the parent.
COFCO International shares rose as much as 16.5 per cent to a 9-year high before paring gains to close up 13.4 per cent at HK$6.18, outpacing a 1.3 per cent drop in the benchmark index. Shares in the company have risen 79 per cent this year.
COFCO International said the beverages assets to be acquired included 100 per cent of COFCO Beverages Ltd, which owns 65 per cent of a joint venture with Coca Cola Co for production, bottling and distribution of Coca Cola beverages in certain areas in China.
It would also take 100 per cent of COFCO Shaoxing Winery Co Ltd, which produces and distributes a range of Shaoxing wines.
The agri-industrial business to be acquired included biofuel and biochemical, brewing materials and oilseed, rice and wheat processing businesses in the mainland, the firm said.
COFCO International, which will change its name to China Foods Ltd. on completion of a restructuring, said it would buy a 20 per cent stake in Shenzhen Nantian Oilmills Co Ltd, which is involved in oil extraction, soybean meal production and the sale of edible oil.
The firm said it would also buy a brewing materials business involved in the production and sale of malt used for brewing beer and distribution of malting barley on the mainland.
The food processing firm said it proposed to spin off its agri-industrial business on Hong Kong's main board, but the terms and timing of the spin-off have yet to be completed.