Cofco’s listed units surged for a second day, after people with knowledge of the matter said China’s largest food company has invited investment banks to submit proposals for a possible group restructuring.
Cofco Tunhe jumped as much as 7.2 per cent in Shanghai trading Tuesday, giving the sugar producer a $4.8 billion market value. Cofco Biochemical, which makes flavouring agents and preservatives, gained as much as 6.3 per cent in Shenzhen. The group’s packaging arm, CPMC Holdings, advanced as much as 9.2 per cent in Hong Kong to the highest since October 2014 while China Mengniu Dairy rallied as much as 4.1 per cent.
State-owned Cofco will consider combining units and selling peripheral businesses to improve profitability, the people said Monday, asking not to be identified as the information is private. Cofco Tunhe said in an exchange filing Monday its Beijing-based parent company is planning a group listing as a “strategy for future development,” though no timetable has been set.
Restructuring possibilities that may be proposed include Cofco’s cooking-oil producer China Foods divesting its confectionery business or merging with a sister company such as oilseed processor China Agri-Industries Holdings, the people said. Cofco, which has operations in 140 countries, was founded in 1949 and grew through a series of mergers to amass more than $57 billion of assets, according to its website.
The state-run company, which last year bought controlling stakes in Dutch grain trader Nidera BV and Noble Group’s agribusiness arm, is also weighing a plan to combine all the grain, edible oil and sugar businesses currently spread across different units, according to two of the people. It would then seek a stock-market listing for the merged business by 2019, they said.
Bloomberg News, edited by ESM
