Singapore listed pan-Asian, industrial agri-food company Japfa Ltd has bought out the minority partner in its Myanmar joint venture poultry firm for US$5.7 million.
Currently Japfa through its wholly owned subsidiary Japfa Myanmar JV Pte Ltd owns 85% in the Myanmar JV company – Japfa Comfeed Myanmar Pte Ltd (JCMA). The remaining 15% is Best Livestock Limited.
The deal will see the Japfa subsidiary buyout the 5% equity stake held by Bet Livestock in their Myanamr JV. Following the acquisition, Japfa Comfeed Myanmar Pte Ltd will be a wholly-owned subsidiary of the Group.
Japfa has operations in Indonesia, China, India and Indo-China.
As at 30 September 2014, JCMA had a net profit of US$9.6 million and net assets of US$19.5 million. Myanmar’s operations currently produce less than 5% of the Group’s total poultry and poultry feed production volumes, but Japfa said the country offers tremendous potential, citing a Frost & Sullivan report that pointed out that Myanmar had seen a steady rise in per capita poultry meat consumption.
“The per capita poultry meat consumption grew at a compounded annual growth rate of 3.8% from 2008 to 2013. Frost & Sullivan also forecasts the per capita consumption to increase at a CAGR of 3.3% from 2013 to 2018. The rapid growth of the poultry industry in Myanmar has been driven by macroeconomic factors such as increasing disposable income, demographic changes and rising rates of urbanization,” the company said, justifying the rationale behind the move.
In Myanmar, JCMA currently operates a vertically integrated poultry business ranging from feedmills, poultry breeding farms and hatcheries, to commercial and contract farms. It is one of the largest private feed mill players in Myanmar where the majority of industry players are small-scaled.
“A refundable deposit of US$1.0 million will be paid on or around 2 February 2015 and the remaining US$4.7 million will be paid upon completion of the SPA, after all conditions precedent have been satisfied, the primary condition being the approval of the Myanmar Investment Commission,” the company said in a filing with the local exchange.
JCMA is also well-established in major townships such as Yangon, Mawlamyine and Mandalay where there is a strong pool of customers.
“A change in the Myanmar regulations has created an opportunity for the Group to fully own its Myanmar operations and reap the full benefits of this fast-growing poultry market. By replicating our Indonesian poultry business model, we now enjoy a first-mover advantage and hold a leading market position for poultry in Myanmar,” explained Mr Tan Yong Nang, Chief Executive Officer of Japfa.