Thailand’s Charoen Pokphand Group (CP Group) is selling $175 million in convertible preference shares and options in C.P. Pokphand Co. Ltd. (CPP) to The Carlyle Group, a global alternative asset manager. Following the acquisition, Carlyle will own approximately 11.3% of CPP.
Carlyle has agreed to purchase approximately 2.271 billion convertible preference shares, and is entitled to additional convertible preference shares in certain circumstances, for an aggregate price of $175 million, and CP Group will grant approximately 324 million options each carrying the right to acquire one convertible preference share in CPP at HK$0.6 per share to Carlyle. The investment is subject to certain conditions and is expected to close by July 22.
CP Group plans to use part of the proceeds from this transaction to prepay before the end of 2010 approximately $150 million of the intercompany debt of approximately $288 million which is outstanding to CPP.
Stable and growing meat consumption is driving demand for livestock feed, and China’s per capita animal protein consumption is still below most developed countries, according to CP Group. It is expected that as meat consumption in China grows, along with its rate of disposal income, the demand for animal and aqua feed products will also increase.