Anglo-Dutch consumer goods company Unilever has strengthened its foothold in the fast growing Asian market with the announcement that it is to buy out its local partner Ajinomoto in six joint venture companies in five countries.
CPC/Aji Asia was established in 1987 as a 50-50 joint venture between Bestfoods and Japan-based food and ingredients company Ajinomoto, but the Asian group will now sell its shares in two batches - half in March 2003, the remainder a year later. Unilever became Ajinomoto's partner in CPC/Aji in 2000 when it acquired the US-based Bestfoods.
Unilever will pay $381 million for Ajinomoto's shares, valuing the whole company at $762 million. The deal is subject to approval by regulatory authorities.
Although Ajinomoto will not complete the sale of its shares until March 2004, Unilever will have operative control of the CPC/Aji Asia business from 25 March this year, consolidating 100 per cent of the sales and operating profit from that time.
The joint venture operates in Hong Kong, Thailand, Malaysia, the Philippines (where it has two production sites) and Taiwan, and also has a sales/marketing office in Singapore.
CPC/Aji's leading brands, which accounted for more than 80 per cent of its total 2002 sales of some $330 million, include the internationally known Hellmann's mayonnaise, Knorr soups and bouillon and Skippy peanut butter. Local brands include Lady's Choice dressings and Royal pasta.
Unilever Foods director Patrick Cescau said: "This is a strategically important acquisition for Unilever as it further strengthens the presence of our leading brands in a high growth regional market of more than 190 million consumers.
"The full integration of the acquired business into our Unilever Bestfoods Asia operations will give it total access to our innovation capabilities and distribution network strength, and will provide the fuel for higher investment behind our brands."
Ajinomoto said it expected to increase its profits by around 12 billion yen this year and by 13 billion in 2004 as a result of the sale, which was agreed after the two companies decided to pursue separate Asian growth strategies.
The Japanese company already has subsidiaries in all the countries where the joint venture operated, and that there would be no reduction in sales of its products there. Instead, these units will increase their product ranges to include more processed food products in addition to the seasonings which they already produce and distribute.