Acquisition

RNS Number:0324E
Pokphand (C.P.) Co Ltd
20 November 2002

The Stock Exchange of Hong Kong Limited takes no responsibility for the contents
of this announcement, makes no representation as to its accuracy or completeness
and expressly disclaims any liability whatsoever for any loss howsoever arising
from or in reliance upon the whole or any part of the contents of this
announcement.

C.P. POKPHAND CO. LTD.

(Incorporated in Bermuda with limited liability)

DISCLOSEABLE AND CONNECTED TRANSACTION

ACQUISITION OF YUE THAI INDUSTRIAL (TIANJIN) COMPANY LIMITED

The board of directors of the Company announces that on 18th November, 2002,
Chia Tai Agro, a wholly owned subsidiary of the Company, entered into the
Acquisition Agreement with Chia Tai International for the acquisition of all the
issued shares in Yue Thai and all outstanding shareholder's loans advanced by
Chia Tai International to Yue Thai for a consideration of US$888,000
(approximately HK$6,926,400).

The Acquisition constitutes a discloseable transaction of the Company under the
Listing Rules.

As at the date of this announcement, the Chearavanont Family, whose members
include Mr. Dhanin Chearavanont, the Honorary Chairman and a Director, and Mr.
Sumet Jiaravanon, the Chairman and a Director, beneficially own in aggregate
49.42% of the issued share capital of the Company. Chia Tai International is a
company controlled by the Chearavanont Family and is a connected person of the
Company for the purposes of the Listing Rules. Accordingly, the Acquisition
constitutes a connected transaction of the Company and is subject to the
approval of the independent shareholders of the Company pursuant to Rule 14.26
of the Listing Rules. A special general meeting of the Company will be convened
and a circular containing details of the Acquisition will be despatched to the
Shareholders for this purpose.

A.   ACQUISITION

Acquisition Agreement dated 18th November, 2002

Parties

(1)   Chia Tai International (as vendor)

(2)   Chia Tai Agro (as purchaser)

Assets to be acquired

Chia Tai Agro has agreed to acquire the entire issued share capital of and the
benefit of all of the shareholder's loans due from Yue Thai to Chia Tai
International.

Yue Thai

Yue Thai is an investment holding company whose assets are comprised of its 100%
equity interest in each of Chia Tai Real Estate and Chia Tai Enterprise and its
60% equity interest in Chia Tai Jinthai. The Yue Thai Companies are principally
engaged in the extraction of soybean oil and manufacturing of soybean meal for
domestic consumption in the PRC. As at 31st December, 2001, the major assets of
the Yue Thai Companies include certain fixed assets (e.g. production facilities)
and inventories whilst the major liabilities of the Yue Thai Companies include
certain bank loans and the indebtedness owing by Yue Thai to Chia Tai
International by way of shareholder's loans in the aggregate amount of
HK$183,523,000.

Based on its consolidated audited accounts, the audited net profit/(loss) of Yue
Thai before and after taxation, extraordinary items and minority interests for
the two years ended 31st December, 2000 and 2001, and its net tangible assets as
at 31st December, 2000 and 2001, are set out below:
                                                                           2000                       2001
                                                                        HK$'000                    HK$'000
Net profit/(loss)          before                                        13,026                   (16,021)
                           after                                         13,420                   (15,827)
Net tangible assets                                                     132,538                    114,594

Consideration

The consideration payable by Chia Tai Agro in respect of the Acquisition in the
sum of US$888,000 (approximately HK$6,926,400) was determined following
commercial negotiations between Chia Tai Agro and Chia Tai International taking
into account the existing operating environment of the Yue Thai Companies, the
future growth potential in the business of the Yue Thai Companies and the
requirement of the Yue Thai Companies for additional investment to fund the new
equipment referred to under the section entitled "Reasons for the Acquisition"
below. The total consideration represents a discount of approximately 94% to the
net tangible assets of Yue Thai as at 31st December, 2001. The Directors
consider the terms of the Acquisition are fair and reasonable so far as the
Shareholders are concerned. Payment of the consideration will be funded by the
internal resources of the Group.

Condition

Completion of the Acquisition is conditional upon the passing of a resolution at
a special general meeting of the Company approving the Acquisition by the
independent shareholders of the Company.

Completion

Completion of the Acquisition will take place on the first day following the
date upon which the condition of the Acquisition Agreement is fulfilled, or such
other date as the parties may agree, and is expected to be not later than 31st
December, 2002.

B.   REASONS FOR THE ACQUISITION

Chia Tai Agro is one of the two wholly owned subsidiaries of the Company which
are the intermediate holding companies for the Group's agri-business operations
in the PRC. Yue Thai is an investment holding company whose assets are comprised
of its 100% equity interest in each of Chia Tai Real Estate and Chia Tai
Enterprise and its 60% equity interest in Chia Tai Jinthai. The Yue Thai
Companies are principally engaged in the extraction of soybean oil and
manufacturing of soybean meal for domestic consumption in the PRC. The
businesses of the Yue Thai Companies are expected to generate synergy with the
Group's agri-business in the PRC as, with an upgrade of the equipment at the Yue
Thai Companies, the high quality soybean meal then produced by the Yue Thai
Companies would be able to provide a stable supply to satisfy the demand for the
high quality raw material by some of the companies in the Group operating
feedmills in the PRC.

The Directors intend to upgrade the existing equipment at the Yue Thai Companies
and also install new equipment after the Acquisition in order to modify and
improve their existing production capacity. With such improvement, the Yue Thai
Companies will be able to supply high quality soybean meal of the type required
as raw material by certain other companies in the Group which operate feedmills
in the PRC; this would not only greatly improve the operational efficiency of
the Yue Thai Companies but also benefit the entire Group. It is expected that
such capital investment to be made by the Group will amount to approximately
US$1,000,000 (approximately HK$7,800,000), which will be financed by the
internal resources of the Group.

As shown in the paragraph headed "Yue Thai" above, the audited net profit of Yue
Thai for the year ended 31st December, 2000 was HK$13,420,000 whilst the audited
net loss of Yue Thai for the year ended 31st December, 2001 was HK$15,827,000.
The Directors have been advised that the audited net loss of Yue Thai for the
year ended 31st December, 2001 was attributable to, amongst other things, the
decline in the gross profit margin resulting from the intense competition in the
regions where the Yue Thai Companies operated in the PRC and the difficult
operating conditions in 2001. With the provision of the capital investment to
the Yue Thai Companies by the Group after the Acquisition and the consequential
benefits as stated above, it is expected that the results of Yue Thai will
improve in the forthcoming years.

The Directors believe that the Acquisition is beneficial and is in the interest
of the Company and consider the terms of the Acquisition to be fair and
reasonable so far as the Shareholders are concerned.

C.   GENERAL

The Group is principally engaged in the trading of agricultural products,
feedmill and poultry operations, the production and sale of motorcycles and
accessories for automotives and property and investment holding.

The value of the assets to be acquired under the Acquisition Agreement
(determined on the basis that the aggregate principal amount of the
shareholder's loans due from Yue Thai to Chia Tai International is included)
exceeds 15% of the net tangible assets of the Group which is determined by
reference to its consolidated net tangible assets as at 31st December, 2001 and
the unaudited net profit attributable to Shareholders stated in the interim
results for the six months ended 30th June, 2002. On that basis, the Acquisition
therefore constitutes a discloseable transaction of the Company under the
Listing Rules.

As at the date of this announcement, the Chearavanont Family, whose members
include Mr. Dhanin Chearavanont, the Honorary Chairman and a Director, and Mr.
Sumet Jiaravanon, the Chairman and a Director, beneficially own in aggregate
49.42% of the issued share capital of the Company. Chia Tai International is a
company controlled by the Chearavanont Family and is a connected person of the
Company for the purposes of the Listing Rules. Accordingly, the Acquisition
constitutes a connected transaction of the Company and is subject to the
approval of the independent shareholders of the Company pursuant to Rule 14.26
of the Listing Rules.

A special general meeting of the Company will be convened at which a resolution
will be proposed to the independent shareholders of the Company for the approval
of the Acquisition. The members of the Chearavanont Family and their associates
will abstain from voting in respect of such resolution. An independent committee
of the board of Directors has been formed to advise the independent shareholders
of the Company with regard to the Acquisition. An independent financial adviser
will be appointed to advise the independent board committee in this regard.

A circular containing details of the Acquisition, the recommendation of the
independent committee of the board of Directors and a letter of advice from the
independent financial adviser to the independent board committee, together with
a notice convening a special general meeting of the Company to consider and vote
on a resolution to approve the Acquisition, will be despatched to Shareholders
as soon as practicable.

Definitions

"Acquisition"   the acquisition by Chia Tai Agro from Chia Tai International of
the entire issued share capital of Yue Thai and the benefit of the indebtedness
owing by Yue Thai to Chia Tai International by way of shareholder's loans in the
aggregate principal amount of HK$193,388,000 pursuant to the Acquisition
Agreement;

"Acquisition Agreement"   the sale and purchase agreement dated 18th November,
2002 entered into between Chia Tai Agro and Chia Tai International relating to
the Acquisition;

"associate(s)"   has the meaning ascribed to it under the Listing Rules;

"Chearavanont Family"   the Chearavanont family (whose members include Mr.
Dhanin Chearavanont, the Honorary Chairman and a Director, and Mr. Sumet
Jiaravanon, the Chairman and a Director) including the respective associates of
the family members;

"Chia Tai Agro"   Chia Tai (China) Agro-Industrial Ltd., a company incorporated
in Bermuda with limited liability and which is a wholly owned subsidiary of the
Company;

"Chia Tai Enterprise"   Chia Tai Group (Tianjin) Enterprise Co. Ltd., a wholly
foreign owned enterprise established in the PRC and is wholly owned by Yue Thai;

"Chia Tai International"   Chia Tai International Investment Company Limited, a
company incorporated in Hong Kong controlled by the Chearavanont Family;

"Chia Tai Jinthai"   Chia Tai Group (Tianjin) Jinthai Enterprise Co. Ltd., a
sino foreign equity joint venture established in the PRC and which is owned as
to 60% by Yue Thai and as to 40% by Tianjin Railway Branch Office Economic
Technology Development Company;

"Chia Tai Real Estate"   Chia Tai Group (Tianjin) Real Estate Co. Ltd., a wholly
foreign owned enterprise established in the PRC and is wholly owned by Yue Thai;

"Company"   C.P. Pokphand Co. Ltd., a company incorporated in Bermuda with
limited liability whose shares are listed on the Hong Kong Stock Exchange and
the London Stock Exchange Limited;

"Directors"   the directors of the Company;

"Group"   the Company and its subsidiaries;

"Hong Kong"   the Hong Kong Special Administrative Region of the People's
Republic of China;

"Hong Kong Stock Exchange"   The Stock Exchange of Hong Kong Limited;

"Listing Rules"   The Rules Governing the Listing of Securities on the Hong Kong
Stock Exchange;

"PRC"   the People's Republic of China;

"Shareholders"   shareholders of the Company;

"Yue Thai"   Yue Thai Industrial (Tianjin) Company Limited, a company
incorporated in Hong Kong with limited liability and which is a wholly owned
subsidiary of Chia Tai International;

"Yue Thai Companies"   Yue Thai and the subsidiaries of Yue Thai, which are Chia
Tai Real Estate, Chia Tai Enterprise and Chia Tai Jinthai;

"HK$"   Hong Kong dollars, the lawful currency of Hong Kong; and

"US$"   United States dollars, the lawful currency of the United States.

By Order of the Board

Sumet Jiaravanon

Chairman

Hong Kong, 18th November, 2002

Note:   For the purpose of this announcement, the following exchange rate has
been used for conversion into Hong Kong dollars for indication only: US$1 =
HK$7.80


                      This information is provided by RNS
            The company news service from the London Stock Exchange
END

ACQEAAFEAEKAFEE