Friday, May 27, 2011

COFCO to Merge Fuel Ethanol Business from Two Subsidiaries

After April 3, 2011, COFCO Corporation (COFCO) will probably merge the fuel ethanol business from its two subsidiaries, namely China Agri-Industries Holdings Limited (China Agri-Industries, listed in Hong Kong) and AnHui BBCA Biochemical Co., Ltd. (BBCA Biochemical, listed in China mainland) within six months.
In fact, China Agri-Industries is wholly owned by COFCO and 20.74% shares of BBCA Biochemical is owned by COFCO which is also the largest share holder of BBCA Biochemical. In order to avoid competitions in fuel ethanol business between the two subsidiaries, COFCO has signed an agreement with China Agri-Industries before its listing in Hong Kong. This agreement included: China Agri-Industries has the option and the pre-emptive right to purchase the shares owned by COFCO in terms of the five competitive businesses mainly referring to fuel ethanol business. If China Agri-Industries does not buy the 20.74% shares of BBCA Biochemical from COFCO by April 3, 2011, COFCO will have to sell it to the non-related third party within six months since April 3, 2011.

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