Indonesia’s Indofood secures over 50% stake in China Minzhong Food

Indofood Sukses Makmur (Indofood), an Indonesian-based instant noodle manufacturer, has announced that it now holds a more than 50% stake in Singapore-listed vegetable supplier China Minzhong Food (CMFC).

This announcement comes after Indofood increased its stake in CMFC from 29% to 33.49% earlier this week, after buying additional shares from the market at S$1.12 per share, a deal which valued the latter at approximately S$734m ($575m).

As of 2 September, Indofood owned 33.49% of CMFC, which mandated a compulsory offer for the purchase of remaining shares at the same price, as agreed earlier.

In accordance with a law in Singapore, a company holding more than 30% stake in a local firm will be allowed to purchase all shares at a fixed price.

Indofood stated that the move will be mutually beneficial to both the companies and it believes China Minzhong could complement its portfolio.

The transaction will provide opportunities for strategic integration and synergies, including introduction of industrialised farming in Indonesia, supply of instant noodles seasoning pack ingredients and other raw materials, sale and distribution of China Minzhong products in the country, using Indofood network, cooperation in supply chain and product distribution in the Chinese and Indonesian markets.

It will also leverage Indofood’s strengths including financial, management knowledge, and expertise to further improve CMFC’s operations, expand CFMC’s international footprint and replicate its business model on industrial and conventional farming in Indonesia.

Indofood president director and CEO Anthoni Salim said that China Minzhong’s integrated cultivation and processing capabilities provide a strategic fit to the company’s business development.

"We could leverage on their business model, technology and expertise to strengthen our supply chain and expand our product portfolios," Salim added.

Last week CFMC’s stock market value plunged to $273m, following a report on accounting irregularities at the company by California-based Glaucus Research.

Indofood noodle brands include Indomie, Supermi and Sarimi; the company also owns palm oil producers Salim Ivomas Pratama and Perusahaan Perkebunan London Sumatra Indonesia as well as flour miller Bogasari.

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Image: Indofood believes China Minzhong’s business to be strategically complementary to its business. Photo courtesy of Olga Zielinska.