Uni-President Enterprises Corp (統一企業), the nation's biggest food company, may form a joint venture with China's Shanghai Bright Dairy & Food Co (光明乳業), the Tainan-based food maker told the Taipei Times yesterday.
"Bright, which has established an extended retail network in China, is a good partner who we are eager to work with," said Simon Hung (洪士民),a Uni-President spokesman.
Uni-President is in talks with Bright on the proposed team-up and a deal has not been signed yet, Hung said.
Uni-President has been looking for a partner in China to manufacture dairy products and chilled drinks, Hung added.
The company announced in early January it would form a 50-50 joint venture with Japan's Kirin Beverage Corp to make tea, coffee and health drinks in the Beijing area, after another Taiwanese company, Tingyi Holding Corp (頂益控股), said earlier that month that it would cooperate with two Japanese companies to bolster its foothold in China's soft drink market.
Bright -- China's largest dairy producer and 3.8 percent owned by Danone Asia (達能亞洲) -- would hold a 50 percent stake in the new company, according to a letter written by Bright shareholder Longce Consulting Co to Uni-President head Kao Ching-yuan (高清愿) and Bright board members.
Bright would contribute a juice unit to the venture, which would sell fruit juices, teas and coffee in China, the letter said. It didn't specify what money Uni-President would contribute.
Longce Consulting owns a 5 percent stake in the unit and says a tie-up with a major rival isn't sound business.
"We are concerned about the risk of a partnership with Uni-President,'' said Xie Ming, a partner in Longce. "Bright Diary will lose its competitiveness.''
Bright is China's second-biggest producer of chilled juice, according to Longce director Tu Songhua, who signed the letter.
It competes with Uni-President in milk and non-carbonated beverages. Uni-President will appoint the venture manager, under the terms of the agreement to be signed, Tu said.
"Fruit juice is Bright's crown jewel," Tu wrote, in a copy of the letter obtained by Bloomberg.
"All core intelligence of Bright, including cost structure and sales network, will be transparent to Uni-President. We're competitors, not partners," the letter said.
Minority shareholders have been slow to find their voice since China's stock markets reopened in 1991. Victories are rare because the government controls about two-thirds of most listed company shares.
One exception was China Merchants Bank (招商銀行), which cut a planned 10 billion yuan (US$1.2 billion) convertible bond sale by one-third in February after minority investors complained about their shares being diluted.
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