Foodstuff producer Kido Corporation (KDC) has finally been given the go-ahead to raise its stake in Vietnam Vegetable Oil Industry Corporation (Vocarimex), paving the way for the group to penetrate deeper into the vegetable oils market.

In the latest filing to the Ha Noi Stock Exchange, Vocarimex agreed to Kido’s offer to raise its stake from 24 per cent to 51 per cent.

The transaction will be conducted through negotiation, bypassing the obligation of making a public bid to purchase shares.

The move is necessary for Kido to become the parent company of the oil vegetable oil manufacturing company.

Vocarimex’s shares are trading on the Unlisted Public Market Company (UPCoM) for about VND28,000 (US$1.24) per share. At this price, Kido is estimated to spend almost VND921 billion ($40.7 million) for the purchase.

The deal is expected to occur in the first quarter of this year.

Apart from Kido, the State Capital Investment Corporation (SCIC) and VP Bank Securities Co (VPBS) are other two major shareholders of Vocarimex, each holding 36.3 per cent and 8 per cent of its capital, respectively.

In a related development, Vocarimex also accepted the VPBS’s proposal to divest its holdings ahead of schedule.

Vocarimex is one of the largest local vegetable oil firms where Kido has aimed to seize  a controlling stake to penetrate into the food and spice markets after its withdrawal from the confectionery sector.

Besides Vocarimex, in November 2016, Kido spent more than VND1 trillion to buy a 65-per-cent stake in Tuong An Vegetable Oil Joint Stock Company (TAC)

Kido reported total revenues of VND2.24 trillion and net profits of nearly VND1.2 trillion by the end of 2016, up 43.2 per cent in revenues but down 77.8 per cent in net profits compared to the previous year.

Frozen food remained the biggest contributor to the company’s total revenues with sales of more than VND1.3 trillion, up 30 per cent year-on-year. According to Euromonitor International, Kido holds 36.9 per cent of the domestic ice cream market. – VNS