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JARDINE Cycle & Carriage (JC&C) has agreed to acquire a 5.53 per cent interest in dairy producer Vietnam Dairy Products Joint Stock Company (Vinamilk) for US$616 million cash.
The acquisition, to be funded by JC&C through internal resources and external borrowings, will be done through the market and its successful participation in an auction by the State Capital Investment Commission of Vietnam (SCIC) last Friday. SCIC is the largest shareholder of Vietnam-listed Vinamilk.
The acquisition is in line with the JC&C group's strategy of investing in market-leading companies in South-east Asia. In particular, it increases JC&C's exposure to the Vietnamese economy, and consideration will be given from time to time to making further such investments, said the company in an announcement.
Assuming that Vinamilk was acquired in January 2016, the proforma financial effects of the deal would see JC&C's earnings per share increase from 178 US cents to 180 US cents.
Vinamilk has a market share of some 58 per cent in Vietnam's dairy market and is the largest listed company in the country by market capitalisation - some US$10.9 billion as at Nov 10 - and operates 13 dairy factories, owns 10 cow farms and has 240,000 retailers as exclusive distributors.
Vinamilk has a presence in over 43 countries and territories outside Vietnam and is also 18.74 per cent owned by Singapore-based Fraser & Neave (F&N).