Japanese trading house Itochu is teaming up with Thai agricultural giant Charoen Pokphand Group to invest $US10.4 billion ($A11.25 billion) in Chinese conglomerate Citic Group.
The deal would see the pair acquire a 10 per cent stake in Citic for $HK34.4 billion ($A4.76 billion) and invest another $HK45.9 billion in convertible preferred shares, which could ultimately double the size of their stake in the Chinese firm.
By investing in politically-connected Citic, the firms would likely gain easier access to highly regulated Chinese business sectors, including resource development, logistics and real estate.
“Itochu Group has always weighed emphasis in Asia, but the China market has been considered as most important of all, and has been actively expanding trade and construction of strategic cooperation with leading local businesses,” Itochu said in a statement on Tuesday.
“(The three firms) are highly complementary with each other and match well either in terms of business layout or scale, and the combination of strength will help to bring about more synergies from the strategic co-operation … in the ever-expanding China and Asia markets.”
Itochu is Japan’s third-biggest trading house with distribution networks worldwide, and has strong links to China – its former chief executive, Uichiro Niwa, previously served as Japan’s ambassador to China.
CP Group was founded by billionaire Dhanin Chearavanont, who with his siblings grew the family business into Thailand’s biggest agribusiness company, which makes animal feed and operates a range of pig, chicken and seafood farms.
Citic is involved in a variety of industries, including banking, brokerage services, real estate and construction.
For Citic, which has focused largely on the domestic market, a deal could help it tap new markets in emerging economies such as Africa and Latin America, using Itochu’s and CP’s vast networks in food distribution and resource development, Japan’s leading Nikkei business daily reported.