CP, Itochu buy shares in China's largest conglomerate

"CP was the first foreign company in China after the country opened its doors," said Dhanin Chearavanont, chairman of CP Group. "I'm delighted with the opportunity to invest in one of the largest and most diversified enterprises in China." 

Established in 1979 under direction of the State Council of China and now listed on the Hong Kong Stock Exchange, Citic has operated in many industries from financial services to real estate & infrastructure, engineering contracting, oil & gas exploration and manufacturing. Its consolidated assets stood at HK$5.3 trillion (approximately Bt22.37 trillion) at the end of 2013. 

The strategic deal followed China's efforts to reform state-owned enterprises, to expand funding opportunities, increase transparency, develop and strengthen corporate governance and globalisation. 

CP and Itochu will set up a 50:50 joint venture to buy ordinary shares and preferred shares of Citic.

"The strategic cooperation with Citic - the largest conglomerate in China, and CP - one of Asia's leading conglomerates, will significantly strengthen Itochu's growth strategy to "develop its non-resource business sector primarily in China and Asia"," Itochu said in a statement.

It noted that the deal was struck thanks to the fact that Itochu was the first company to be designated as a friendly trading company by the Chinese government in 1972 while CP was the first foreign company to enter into China after it opened its doors to foreign investment in 1979.

"In addition to the strategic cooperation agreement between the three companies, the joint capital participation in Citic and appointment of board members will enable higher level of coordination and intimate business relationship to create new business opportunities and boost profitability," Itochu said in the statement.

"We plan to expand our existing operations into new business opportunities by combining the widespread customer base, brand power in China and a wide range of group companies under the Citic Group with the business know-how and global network developed in various industries by Itochu and CP Group to date."