SATS, Wilmar team up in JVs to supply safe food in China

It’s bound to be a beneficial partnership, say analysts.

SATS Limited (SATS)’s subsidiary, Singapore Food Industries (SFI), has inked two conditional joint venture agreements (JVAs) with Wilmar International (Wilmar)’s Chinese subsidiary Yihai Kerry Investments (YKI).

According to a report by OCBC, the JVAs involve supplying high quality and safe food to the Chinese market.

The deals will see, firstly, SFI and YKI subscribe 60% and 40%, respectively, to incorporate an investment holding company (JV Co) with an expected capital of RMB230m in China. The JVAs will also have SFI and YKI respectively subscribe 60% and 40% to incorporate another JV as an operating company in China with an expected capital of RMB200m, which will become a subsidiary of JV Co.

OCBC notes that it is a sound proposition to provide high quality and safe food to the Chinese market, especially as the country is plagued with scandals of unsafe food. OCBC thereby posits that over the long-term, SATS will benefit from such collaboration.

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