Tokyo, Nov 20 - Japan's fourth-largest trading house Itochu Corp said on Thursday that it would buy a 20 percent stake in Chinese food processing company Ting Hsin Holding Corp for $710 million to tap fast-growing demand.
Japan's big trading houses, which have enjoyed bumper years from betting on iron ore and metals, are pushing into the food market, attracted by voracious demand in China and other emerging markets.
Itochu's deal is the latest in a string of overseas acquisitions by Japanese companies, helped by a stronger yen and cheaper stock prices.
So far this year, Japanese companies have signed cross-border deals worth a total of $68 billion, more than triple the amount a year ago.
Itochu, which has already teamed up with a Chinese food wholesaler COFCO to help procure food from around the world, will buy the stake in Ting Hsin by gradually purchasing new shares, starting next January and ending in May, Itochu said.
Itochu, Japanese food companies and Ting Hsin have already set up bread and beverage production joint ventures in China, Itochu said. Ting Hsin is one of China's largest food companies and owns Tingyi Holding Corp.
Due to the growing importance of food safety and quality control in China, Itochu said it aims to participate directly in the management of Ting Hsing and introduce higher Japanese safety standards.
Itochu also said it plans to expand its operations in Chinese and Taiwanese food and distribution markets, with the goal of creating an integrated food business in Asia and Oceania.
Itochu shares slumped 9.5 percent to 408 yen, underperforming the Nikkei 225 Stock Average which fell 6.2 percent.