CHINA – Associated British Foods plc has entered into a binding agreement with Yihai Kerry Arawana Holdings Co., Ltd, a subsidiary of Wilmar International Limited to form a joint venture in China.

The 50:50 JV will be responsible for the manufacture, sale and distribution of yeast and bakery ingredients in the Chinese market.

The JV will acquire existing Chinese yeast and bakery ingredients activities of AB Mauri, a division of ABF, while leveraging on Yihai Kerry Arawana’s supply chain, extensive sales and distribution network and local market expertise.

The joint venture will also build and operate a new yeast plant co-located with Wilmar’s food processing plant in the Taha industrial zone in Qiqihar City, China, significantly increasing capacity.

According to the companies, the joint venture seeks to establish cost competitive production, strong portfolio of products that address the growing consumer demand for traditional Chinese bakery products as well as western-style baked products.

“This joint venture is a great opportunity to build on the foundation of our yeast and bakery ingredients business in China,” said AB Mauri’s Chief Executive Officer, Cathal Duffy.

“The joint venture will leverage AB Mauri’s baking know-how and technology with Yihai Kerry Arawana’s extensive route to market, local management expertise and its complementary portfolio of products.

“We are looking forward to working with Yihai Kerry Arawana on the shared vision of building a successful bakery business together.”

The joint venture will be headquartered in Shanghai, China and its completion is subject to regulatory approval.

ABF is a British multinational food processing and retailing company headquartered in London, UK and operates one of the world’s largest divisions producing sugar and baker’s yeast.

In its latest half year results, ABF reported a 15% drop in pre-tax profit, attributed to low sugar sales.

“Besides enhancing the range of quality ingredients, this joint venture will enable us to leverage on AB Mauri’s baking know-how and technology to provide better service to the baking industry in China,” said Wilmar’s Chairman and Chief Executive Officer, Kuok Khoon Hong.