F&N moves in on China dairy

Related tags Milk

The Singapore-based Fraser & Neave group has made its first
acquisition in the China dairy market, in a move that aims to tap
in on double digit growth, the company reports.

Last week F&N​ announced that its Singapore dairy operation, F&N Dairies had purchased a 22.1 per cent interest in TSM Resources, the holding company for the Silver Bridge Group, a leading distributor and wholesaler of dairy products in China, at cost of SGD34.9 million (€16.8m), with an SGD4.9 million cash pay out to vendors. The acquisition makes F&N the second largest shareholder in the group.

F&N, which, on top of its food and beverage division, also has printing and publishing and property divisions, says that Silver Bridge's operations are currently ranked amongst the top diary companies in China, with major market in Shaanxi, Shandong and Jiangsu provinces.

Strategically located in Xian, Shaanxi Province, Silver Bridge is also said to be ideally located to meet the dairy needs of customers within an 800 km radius. This area, F&N points out, holds a potential market of approximately half the country's population. Silver Bridge is considered to be one of the largest dairy companies in the northwestern region of the PRC and in 2003 it contributed the vast majority of TSM's revenue and profits.

Commenting on the acquisition, Dr. Han Cheng Fong, managing director of the group said, "F&N is already a major dairy player in South-east Asia. This acquisition is an important milestone for F&N as it signals our entry into the fast growing PRC dairy industry. This is in line with our vision to become a leading Asian based multinational consumer group. We are extremely impressed by Silver Bridge's business operations and have full confidence in the leadership of Mr Liu Hua Guo and his management team. Our investment in TSM seals the strategic partnership between the Silver Bridge Group and F&N."

Liu Hua Guo, CEO of Silver Bridge said that he was confident that the new partnership would allow the company to expand further in the Chinese dairy segment.

Meanwhile F&N has also said that it has big hopes of increasing its fresh milk sales at its Malaysian dairy division. Speaking in an interview with the Bernama news service, general manager Khoo Thiam Hock said he is expecting the company's share of sales from fresh and pasteurised milk to increase from around 10 to 20 per cent as more and more Malaysians take up on its ready-to-drink milk range. Hock cited women's pursuit of low fat products that serve to increase bone health as being the driving force behind the increase.

Currently the pastuerised milk market in Malaysia is estimated to produce 20 million litres a year with a value of RM75 million (€16.3m).

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