Chinese aquaculture giant splurges $161m on condom fiderm
By Louis HarkellJan. 16, 2018 09:13 BST
One of China's largest producers of freshwater fish, Dahu Aquaculture, is betting big on Chinese having more sex after acquiring a majority stake in a condom company for CNY 1.04 billion ($161 million).
Fish and condoms may make unusual bedfellows but the deal demonstrates further Chinese seafood companies' interest in diversification, amid bubbly Chinese equity markets and low profitability in the Chinese seafood sector.
Hunan-based Dahu Aquaculture, which claims to control the largest area of freshwater resources in China used for farming fish, acquired the majority stake in the Chinese owner of Okamoto China last month. Okamoto China is the marketer and distributor of Japan's top-selling condom company Okamoto.
The deal by Dahu Aquaculture, which farms freshwater carp, turtles and other species, sees it gain a 51% share in a stock plus cash deal, according to a company filing.
Other Chinese seafood firms have moved into new sectors. In 2016, Shandong Ocean Oriental, another large market-listed seafood firm, acquired Avioq, a US manufacturer of medical equipment and in 2017, announced it would build a hospital in Yantai, Shandong province. Tongwei Group, China's largest manufacturer of aquatic feed, has branched into manufacturing solar panels and batteries.
Dalian Tianbao Green Foods, China's largest market-listed seafood processing company, also makes ice creams.
"Dahu Aquaculture is China's largest company raising and selling freshwater fish. But its aquaculture business is demonstrably weak at adding value and profits are low. In each of the past three years, profits have been less than CNY 10m," said Sina Finance, a Chinese financial publication.
In a recent report, Rabobank noted China is expected to drive global growth in seafood consumption over the next decade, but low profitability of Chinese seafood companies could limit their outbound M&A.
The deal is subject to approval from authorities, with the Shanghai Stock Exchange requesting more relevant information from Dahu Aquaculture last week. Shares in the firm, which ceased trading in September in the run-up to the deal, remain suspended.
In 2016, Dahu Aquaculture reported annual revenues of close to CNY 1bn.
Meanwhile
Chinese aquaculture firm’s $160m deal for Okamoto condoms distributor investigated
By Louis HarkellJune 10, 2019 10:32 BST
A deal which merged a Chinese fish farming company with one of the most popular condom brands in China is in jeopardy after Chinese authorities said they are investigating the transaction.
Dahu Aquaculture, China’s largest farmer of freshwater fish with revenues of CNY 1.07 billion ($154.8 million) in 2018, said Chinese authorities are investigating the firm’s deal last year to buy a 51% stake in the Chinese arm of Japanese condom manufacturer Okamoto for CNY 1.04bn.
According to the company filing at the Shenzhen stock exchange on June 6, the investigation by the China Securities Regulatory Commission pertains to “violations of stock market rules”.
China’s Sina Finance reports the investigation possibly relates to insider trading.
Okamoto China, the Chinese marketer and distributor of Okamoto condoms, ranks alongside Durex as one of the most popular condom brands sold in China. In November last year, counterfeiters were arrestedwith $7m worth of fake Okamoto and Durex condoms in eastern China.
Fish and condoms might make unusual bedfellows but the deal demonstrated Chinese seafood companies' interest in diversification, amid bubbly Chinese equity markets and low profitability in the Chinese seafood sector.
Dahu Aquaculture said work on the merger has now been “temporarily halted” amid the investigation and “risks potentially being called off”.
