Shares of Uni-President Enterprise Co (
"The deal brings Uni-President great benefits to both its food manufacturing and retail channel businesses," said Rachel Lee (
Uni-President gained NT$1.30, or 6.4 percent, to close at NT$21.50 on the TAIEX.
Lee said the deal would further strengthen Uni-President's leading status in the overcrowded food and convenience-store sectors. Wei-chuan Food Corp (
"Through the move, I expect President Chain Store Corp (
Tainan-based Uni-President said on Monday it was spending NT$1.05 billion to buy a 31.25 percent stake in Kuang-chuan Dairy Farm (
Uni-President's 25 percent share of the nation's dairy market combined with Kuang-chuan's 30 percent would make it the nation's No. 1 player in the sector, ahead of Wei-chuan with 35 percent.
"Uni-President, which underwent a 22-percent decline in sales last year because of its major rival Master Kong's (康師傅) low-priced instant-noodles marketing strategy, could not only gain more strength to compete with Master Kong and Wei-chuan in food manufacturing but block them in convenience store channels," Lee said.
Bruce Lu (
In the reports, the company said the alliance between President Chain and Hi-Life could endanger the leading position of Wei-chuan's Lin Feng Ying (
Kuang-chuan, which has suffered from a long-term conflict between the members of the family that owns it, declined to comment on the sale.
"We welcome a highly internationalized company like Uni-President being our shareholder," said an official surnamed Soong at Kuang-chuan who asked to remain anonymous.
"The two parties can utilize resources and cooperate to develop more milk and beverage products in the future," Soong added. "The transaction can also help Kuang-chuan get access to 7-Eleven outlets to market our products."
A more detailed cooperation plan, Soong said, awaited bilateral discussion, as the company did not get much chance to talk with Uni-President beforehand.
Family Mart, the nation's second largest convenience store chain with 1,500 outlets, is also being squeezed in the market.
President Chain is the nation's largest convenience store chain, with 3,500 outlets, followed by Family Mart and then Hi-Life with 950 stores.
"We will proceed with our expansion plans to add 150 outlets this year," said Yeh Jung-ting (葉榮廷), Family Mart's vice president. "We are also engaged in cooperation talks with the postal service as well as schools and hospitals."
Though the deal will have a significant effect on the market it did not violate fair trade regulations as the shares Uni-President acquired accounted for less than one-third, said Chen Chi-yuan (
"Uni-President has to report to the commission if it wants to boost the share to 33 percent in the future," Chen said. "The commission would then evaluate if the deal involved restrictive practices and the impact on the macroeconomic benefits."
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