China Food sells animal feed business
China Food Company (CFC), the Chinese manufacturer of cooking and dipping sauces, has entered into an agreement with Wisehand Planning, a Korean-owned investment holding company, to dispose of the group's animal feed business, for a total consideration of 16m dollars.
China Food Company (CFC), the Chinese manufacturer of cooking and dipping sauces, has entered into an agreement with Wisehand Planning, a Korean-owned investment holding company, to dispose of the group's animal feed business, for a total consideration of 16m dollars.
The business, part of CFC's wholly-owned subsidiary, Full Fortune Holdings, generated pre-tax profit of around £1.6m in 2011, meaning the total consideration represents an exit multiple in excess of six times post tax earnings.
Under the sale, the existing animal feed business will be sold for $8.75m, the new feed factory for $5.5m and the land on which a new factory is being built will trade hands at $1.75m.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
The transaction is expected to be completed by July 30th, by which time the first payment of $4.5m is also due. The timing of the other payments is based on certain milestones.
The disposal is expected to result in a one-off gain of around £4.8m.
John Mclean, Chairman of China Food, said: "The board is pleased with the progress of the disposal of the feed business at a reasonable price despite the depressed stock markets. As a result of the disposal, the company will be able to focus on its core condiments business and the proceeds of the disposal will be used for working capital and restructuring the group's lending facilities."
The share price rose 4.17% to 25p by 10:13.
NR
Sign up to Money Morning
Our team, led by award winning editors, is dedicated to delivering you the top news, analysis, and guides to help you manage your money, grow your investments and build wealth.
-
Christmas at Chatsworth: review of The Cavendish Hotel at Baslow
MoneyWeek Travel Matthew Partridge gets into the festive spirit at The Cavendish Hotel at Baslow and the Christmas market at Chatsworth
By Dr Matthew Partridge Published
-
Tycoon Truong My Lan on death row over world’s biggest bank fraud
Property tycoon Truong My Lan has been found guilty of a corruption scandal that dwarfs Malaysia’s 1MDB fraud and Sam Bankman-Fried’s crypto scam
By Jane Lewis Published