Shares in foodmaker Tingyi (Cayman Islands) Holding Corp (康師傅控股) rose yesterday after Chinese authorities approved the firm’s proposal to set up a strategic alliance with US beverage giant PepsiCo.
Tingyi’s Taiwan depositary receipts (TDR) closed up 4.02 percent at NT$42.70, outpacing the TAIEX, which gained 0.77 percent.
The buying interest in Tingyi, a Taiwanese-owned food manufacturing firm in China, was spurred by the foodmaker’s confirmation on Thursday that the Chinese Ministry of Commerce had approved its application to set up an alliance with Pepsi.
Under the agreement signed in November, Tingyi would acquire a 100 percent stake in Pepsi’s beverage assets in China, while the US company would take a 5 percent stake in Tingyi’s beverage operations.
In addition, Pepsi has an option to raise its stake in Tingyi’s beverage subsidiary to 20 percent by 2015.
Analysts said the alliance showed Tingyi’s ambitions to expand its reach to the carbonated soft drinks business. Its links with Pepsi are expected to boost its international visibility, they said.
Wei Ying-chiao (魏應交), chairman of Tingyi’s parent company, Ting Hsin International Group (頂新集團), said the acquisition of Pepsi’s assets would enrich Tingyi’s product line and contribute to sales starting this year.
Master Kong, Tingyi’s instant noodle brand, is the top seller in China.
The Hong Kong-listed company also has a wide range of drink products, such as bottled water, tea and juice, making it the largest supplier in China.
Having secured regulatory approval from China, Tingyi said it would speed up the deal with Pepsi and try to close it as soon as possible. However, there is no deadline for completing the transaction, Tingyi said.
Tingyi posted US$7.87 billion (NT$233 billion) in sales last year, a record high for the company, but its gross margin fell 1.89 percentage points due to rising raw material costs and unusual weather patterns in China.
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