Tingyi (Cayman Islands) Holding Corp (
"China's beverage market has seen a rapid increase of 30 percent a year since 1990 and we estimate the market will keep double-digit growth annually over the next 10 years," said Frank Lin (林清棠), Tingyi's chief financial officer, in a video-conference with executives of Japan's Asahi Breweries Ltd and Itochu Corp.
Under the agreement, Tingyi, the biggest instant-noodle maker in China, will first establish a beverage holding company registered in the Cayman Islands. The holding company will consist of Tingyi's existing 13 beverage operations in China.
Then Tingyi will sell a 50-percent stake in the holding company, worth US$425 million, to Asahi and Itochu to set up a new beverage venture, Tingyi-Asahi-Itochu Beverages (康師傅飲品控股), exclusively for Chinese operations.
Encouraged by the formation of its partnership with Asahi and Itochu, Tingyi saw its market value increase about US$300 million yesterday.
Shares of the company, which were listed in Hong Kong beginning in 1996, rose to HK$2.225 (US$0.29) during the session, making its market value increase to US$1.6 billion. The closing price was HK$2.325 yesterday.
The new venture will make tea, fruit juice, coffee and health drinks for the soft drink market in China, worth some 117 billion yuan (US$14.1 billion) in 2002.
Lin said that only the top three players in China's market can make profits. With a sales and distribution network covering more than 400 major cities and 700 towns in China, Master Kong bottled tea products are first in the market with a 45 percent market share, while its juice products are in second place with a market share of 20 percent.
Tingyi's business focuses on three sectors -- food manufacturing and distribution, retailing, and chain restaurants -- said Bruce Lu (
"Wei Chuan is planning to expand its milk powder business in China, which is worth about 24.3 billion yuan annually," he said.
China-based Master Kong and Taiwan-based Wei Chuan will handle food manufacturing and distribution, while the retailing will be developed under the brands of Loogoo hypermarkets (
"The chain restaurant business in China will be developed under the brands of Dicos fried chicken restaurants, with more than 300 outlets nationwide, Japanese-style noodles and barbecue restaurants by collaboration with Itochu," Lu added.
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