Wilmar International says unit, PGEO Group Sdn Bhd, has entered into a subscription agreement with FFM Berhad, a unit of PPB Group Berhad, to subscribe for 55,781,250 new shares of RM1 (41.6 cents) each in FFM, or 20% of FFM’s total enlarged share capital, for RM378,118,781.25 ($157.3 million).

In return, the two companies will enter into negotiations regarding the sale of a 20% equity interest in selected subsidiaries of Wilmar in China to Waikari Sdn Bhd, a subsidiary of FFM.

FFM started its first flour mill in Malaysia in 1966 and over the years has built up considerable technical and marketing expertise in the flour milling business. Today, the FFM group owns and operates four flour mills in Malaysia, and one each in Vietnam, Thailand and Indonesia with a combined total capacity of 4,130 tonnes per day. The group is currently constructing its fifth flour mill in Malaysia, which will increase its milling capacity by another 220 tonnes per day.

Wilmar started its flour milling operations in China in 1992 and operates five mills there today with a total capacity of 5,000 tonnes per day. It is in the process of building several new mills in China and also planning expansion into Indonesia and Vietnam.

Wilmar says the proposed FFM share subscription and disposal will enable FFM to benefit from Wilmar’s strength in distribution in the growth markets in China, Indonesia and Vietnam. Wilmar, in turn, will benefit from FFM’s technical and marketing expertise.

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