KUALA LUMPUR: BCM Alliance Bhd is diversifying into the lucrative dairy business segment via the proposed acquisition of a controlling stake in Malaysia’s main distributor of China’s largest dairy player.
BCM has, today, entered into a Letter of Intent (LOI) for the proposed subscription of new ordinary shares and proposed acquisition of existing shares, representing 25 per cent and 26 per cent of the enlarged equity interest in Foodict Maker Sdn Bhd.
BCM said upon completion of the proposed exercise, it will effectively control a 51 per cent stake in Foodict and is expected to benefit from the domestic dairy segment’s strong demand growth, moving forward.
Foodict is the main distributor of Yili’s products in Malaysia.
Yili is China’s largest dairy company and offers the most comprehensive range of products such as yogurt, ice cream, liquid milk, milk beverage, milk powder, health drinks and cheese.
It is listed on the Shanghai Stock Exchange, with a market capitalisation of 174 billion renminbi (about RM102 billion).
Besides distributing Yili’s products, Foodict is also engaged in the sale and distribution of health food and supplements, hair and body care products.
BCM managing director Liaw Chong Lin said the proposed acquisition of a majority stake in Foodict marks the beginning of the group’s investment into non-core areas.
“The entry into the fast-moving consumer goods (FMCG) sector is in line with the management’s strategies to grow our recurring income and diversify our revenue streams.
“Yili has vast growth potential moving forward and the company intends to go big into the Malaysian dairy market, supported by its financial strength.
“This is a positive catalyst for Foodict given its strong association with Yili. Yili will provide the full support for the products’ market entry and marketing efforts in Malaysia. Essentially, the more Yili grows, the more Foodict will grow as well,” he said.
Foodict director Sharp Lee Beng Wai said the demand for dairy products in Malaysia is not only growing fast, but also in very stable manner.
“The market for yogurt has experienced the highest growth rates among all dairy product categories. The fact that yogurt products are commonly perceived as being good for the immune and digestive system has been identified as a key driver for increasing sales.
“With the backing of a listed company like BCM, which has more than 15 years of distribution experience, and coupled with the support from Yili, we aspire to grab a bigger market share of the dairy market in Malaysia,” he said.