Bright Food gets nod to raise stake in listed arm
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The restructuring of State-owned enterprises in Shanghai took another step yesterday with Bright Food (Group) Co getting the approval from the authorities to acquire Shanghai Industrial Holdings' (SIH) stake in dairy firm Bright Dairy & Food Co.
Bright Food, the parent company, plans to purchase 314 million shares or a 30.18 percent stake in its listed entity Bright Dairy from the Hong Kong registered SIH for 1.55 billion yuan.
Following the transaction, Bright Food, controlled by the local State-owned asset regulatory authorities, together with its another subsidiary Shanghai Milk Group, will become Bright Dairy's controlling shareholders with 65.45 percent stake.
Bright Dairy shares rose 1.15 percent to close at 9.64 yuan yesterday, compared with the benchmark Shanghai Composite Index's 1.02 percent fall.
"The stake transfer will provide a clearer roadmap for Bright Dairy and help it to focus on its core business," said Liu Jinhu, an analyst with Sealand Securities.
Wang Zongnan, chairman of Bright Dairy, said in July last year that the deal would help the company to optimize its resource distribution with the parent company.
Analysts are of the view that the transaction would help the company have greater control over the quality of its products.
In fact, quality control has been the biggest challenge for domestic diary firms as many overseas companies decided to exit their local joint ventures in the wake of the melamine scandal in 2008.
French dairy giant Groupe Danone exited Bright Dairy in 2007 by selling its entire 20 percent stake.
Bright Dairy, largely focused on the eastern China market, has lagged far behind its two bigger rivals Mengniu Dairy and Yili Industrial Group.
The company saw its net profit drop 67.8 percent to 45.3 million yuan in the first half of 2009, while Mengniu and Yili posted 662 million yuan and 254 million yuan in net profit in the same period.
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