China Resources buys stake in Scales for $56 million
UPDATED March 16 2016: New investor might scale to supply partner
Hong-King based China Resources has bought a 15% stake in Christchurch agribusiness Scales Corporation [NZX: SCL] for about $56 million.
China Resources Ng Fung, a Chinese state-owned food enterprise, acquired 21.5 million shares – or 15.38% of Scales – at $2.60 apiece from Direct Capital Investments.
Scales' share price has moved up 5.2% to $2.63 since the announcement and has risen about 80% in the past 12 months.
Scales, New Zealand's biggest apple exporter, released a note to the NZX saying it welcomed China Resources as a significant minority shareholder, which can provide support in Scales business in China.
China Resources website says it covers the mainland China and Hong Kong markets and is “an integrated food group containing food research and development, production, processing, wholesale, retail, transportation, and international trade.”
Settlement on the deal is due on March 21.
In February, Scales said it more than doubled annual profit to $38.9 million as its horticulture unit reaped the benefits from selling higher-value apples to key markets.
The company has invested in specialist sweeter apple crops that are sought after by customers in Asia and the Middle East.
Scales also has a storage and logistics business and a food ingredients business.