November 5, 2004
At a meeting of the Board of Directors of Kanematsu Corporation (hereinafter “Kanematsu” held on November 1, 2004, the decision was made to take over the animal feed sales operations of consolidated subsidiary Kanematsu Agritec Co., Ltd. (hereinafter “Kanematsu Agritec#8221;, with effect from January 1, 2005. The details are summarized below.
| (1) |
Reason for takeover of animal feed business:
The animal feed business is one of the core operations of Kanematsu’s Foodstuffs segment. Business activities consist principally of the import into Japan of high-quality animal feed materials, including hay for fodder use, from the United States, Australia, and elsewhere, and its supply to animal feed makers in Japan.
Meanwhile, Kanematsu’s consolidated subsidiary, Kanematsu Agritec, is involved in the supply of safe, high-quality compound feed to livestock breeders in Japan. The company is currently busy responding to the need to prevent an outbreak of BSE, principally through the construction of a specialized plant for the processing of compound feed for cattle, which will be operated by its affiliate Heisei Feedstuffs Co., Ltd. |
| (2) |
By merging the sales operations of the parent company Kanematsu with those of Kanematsu Agritec, we will be able to realize an integrated, start-to-finish feed materials importation and feedstuff processing business. This will yield the following specific advantages:
| 1. |
More rigorous cost management, allowing improved price-competitiveness. |
| 2. |
More extensive and accurate customer preference collection and evaluation capabilities, allowing the production and sale of high-value-added feedstuff, and market differentiation from competitors. |
| 3. |
The establishment of an effective feed traceability system, thereby contributing to the creation of a highly reliable feed supply system from the viewpoint of safety. |
Kanematsu believes that this intra-Group reorganization will ensure a stable supply of animal feed to Japanese livestock breeders amid a changing worldwide food demand situation that is pushing up prices. At the same time, management efficiency will be improved, and our shareholders will enjoy the benefits of a higher enterprise value.
Following the takeover, the combined unit will be given the status of an “in-house company,” or semi-autonomous division. |
