Vietnam feed makers worried about CP dominance

//19 Aug 2011
The information that CP Vietnam has been sold to a Hong Kong-based Company CP Vietnam, has caused a tumult among animal feed producers, because CP Vietnam has been considered the company which controls the animal feed material market in Vietnam.
Recently CPP, whose headquarter is in Hong Kong, has wrapped up the deal of purchasing 70.82% of stakes of CP Vietnam (Modern State) at 609 million dollars to hold the controlling stakes in CP Vietnam.

The news immediately caught the special attention from animal feed producers. Van Duc Muoi, General Director of trading company Vissan, still feels worried after reading the information, because the majority of the farm materials that serve the livestock feed production in Vietnam is being controlled by CP Vietnam.

“The livestock infrastructure in Vietnam remains very weak. Especially, the animal feed market is being controlled by foreign companies, including CP Vietnam,” Muoi said.

This can be understood that Vietnamese enterprises now have worries about the possible changes in the policies of CP Vietnam, once it has a new investor. The changes may badly affect their business plans.”

Sources close to the matter said that the deal has not been completed yet, and that the involved parties are still under negotiations.

By the nature, the purchase deal is simply an action of transferring capital inside the CP Group, while there is no new legal entity involved in the case. “Everything is still being discussed, while no final decision has been made,” a representative from CP Vietnam said.

China export
This means that even though the deal would go exactly the way people think, the operation of CP Vietnam would not see any considerable changes.

Analysts have also said that this will not happen that CPP buys animal feed and then exports to China as domestic businesses think.

The domestic enterprises fear that if CPP does this, this would badly influence the supplies to the animal feed production industry in Vietnam.

“Even though if CPP successfully buys CP Vietnam’s stakes and become a main shareholder, CPP would only join a certain field among the many existing operation fields of CP Vietnam,” the source from CP Vietnam said.

Meanwhile, HCM newspaper quoted Diep Kinh Tan, Deputy Minister of Agriculture and Rural Development as saying that CP is a public company which is listing its shares on the bourse, therefore, the sale and purchase of stakes should be seen as a normal thing.

Tan also said that there are different figures about the animal feed market share being held by CP Vietnam, but the figure just hover around 15 or 17%.

CP Group, besides the main headquarter in Thailand, is operating in Indonesia, Vietnam and Hong Kong as well. Some sources said that the new affair aims to help CP in Hong Kong to polish its image when it prepares to list shares on Hong Kong’s bourse.