Japfa to acquire two dairy farms for $ 165.7 million to strengthen its presence in China

SINGAPORE (THE BUSINESS TIMES) – Agribusiness company Japfa, through its 75 percent subsidiary AustAsia Investment Holdings, has agreed to buy two dairy farms in Shandong, China, by acquiring Falcon Dairy Holdings, has announced the group Monday June 28).

AustAsia, which operates the group’s dairy and beef activities in China, will acquire all of Falcon’s issued capital for approximately US $ 123.4 million (S $ 165.7 million), the group said.

The transaction is expected to close on or around June 30, 2021.

Japfa said the acquisition will allow it to take advantage of the favorable raw milk price environment due to the current supply shortage in the Chinese market, as well as increase AustAsia’s capacity and accelerate its expansion in China.

Falcon owns 100% of the capital of Pure Source Farm Company, which owns the two dairy farms in Shandong province that produce raw milk.

The farms have a total capacity of around 16,000 head of cattle and will increase the group’s production capacity in a shorter time frame compared to building new farms from scratch, Japfa said.

The group said that in addition to the two dairy farms, the transaction also includes two additional plots in Shandong that can be further developed.

Japfa said the Pure Source farms located in Shandong Province are close to AustAsia’s Hub 1 farms, “with the benefits of operational synergies and infrastructure sharing.”

Edgar Collins, head of dairy at Japfa and managing director of AustAsia, added that the acquisition is “a further step in (the group’s) strategy of becoming the leading independent supplier of raw milk in China.”

Japfa shares closed at 83.5 cents on Friday, down 0.5 cents or 0.6%.

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