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Catlle feed unit to be bought out by Japanese Snow Brand Milk

Published on 13 December, 2007, Last updated at 11:06 GMT

Snow Brand Milk Products Co. (TSE:2262) said Tuesday that it will turn feed subsidiary Snow Brand Seed Co. (TSE:2057) into a wholly owned unit through a tender offer.

Increasing its stake to 100 per cent from the current 50 per cent is expected to help Snow Brand Milk cut costs by establishing an integrated operation whose scope ranges from feed production to dairy product sales.

The offer begins Wednesday and ends January 23. The parent will pay 550 yen (US$4.92) a share, a premium of 33.2 per cent over Snow Brand Seed's average closing stock price for the three months ended Monday. The acquisition is expected to cost a total of about 6.6 billion yen.

Snow Brand Seed has agreed to support the tender offer and will be delisted in May or June of next year. It announced Tuesday that it will cancel dividend payouts for the year ending June 2008.

The subsidiary produces and sells cattle feed, and it cooperates with Snow Brand Milk in research and development. But as corn and other ingredients rise sharply in price, the companies see a need to cut costs by integrating back-office and other operations.


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