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COFCO Builds Only Focused Beverage Business Platform Release Time : 2017-10-16
16 October 2017, China Foods Limited (“China Foods”, stock code: 0506.HK), a subsidiary of COFCO Corporation (“COFCO” or “Group”), announced the disposal of all its wine business and other non-beverage business to China Foods (Holdings) Limited, a wholly-owned subsidiary of its controlling shareholder COFCO at a total transaction value of approximately HK$5,069 million (“the Transaction”). The Transaction is subject to the approval of independent shareholders at the Special General Meeting (“SGM”). To return shareholders, China Foods has proposed to pay shareholders from the proceeds a special dividend of HK$0.93 per share or in aggregate approximately HK$2,601 million after the approval of independent shareholders at the SGM and after the completion of Transaction.
Mr. Zhao Shuanglian, Chairman of the COFCO,indicated that The Transaction is another important move of COFCO in implementing its specialization platform strategy and executing vertical integration through the establishment of specialized companies target in core products, which agrees with COFCO’s overall strategic approach of building specialized companies and optimizing its capital system. The reform of state-owned capital investment companies implemented by COFCO separates management of capital and assets, while specialized companies as the operating entities to audit independently the cost of personnel, assets, properties, production, procurement and sales. Benefiting from the implementation of specialized system, the capital and assets structure, resources allocation, major indices, cost and effectiveness of the Group are all enhanced.
Upon the completion of the transaction, China Foods will become the only focused beverage platform of COFCO. In the future, the Company will solely focus on the beverage business, continue to optimize its business and improve its profitability. The beverage business has always been the strong growth driver of China Food’s results performance. Currently, it has exclusive rights to produce, market and distribute Coca-Cola products in 19 provinces, municipalities and regions in China. Its EBITDA had grown at a CARG of 5.6% between 2011 and 2016. Following the completion of refranchising of bottling business in China in April 2017, the market is dominated by two players rather than three, and the number of bottling plants owned by China Foods had increased from 12 to 19 to serve the scaled up business, providing coverage to approximately 51% of the population in the PRC and approximately 81% of the regional market area. Looking ahead, China Foods will strengthen cooperation with Coco-Cola Company on beverage business, keep optimizing product offerings, ensuring the continuous growth of potable packaged-water, soft drinks and juice products and launching new higher margin products, all to the end of enriching the product mix for the China market on the basis of mutual agreement.
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