(Yicai) Sept. 5 -- The two China subsidiaries of Singaporean food processing giant Wilmar International plan to acquire stakes in Chinese peanut oil maker Luhua Group, strengthening its foothold in the market.

Yihai Kerry Arawana Holdings and its Hong Kong affiliate Grand Silver Laiyang will acquire a combined 26.6 percent in exchange for their entire stakes in six joint ventures with privately-held Luhua, the Shanghai-based unit said yesterday.

The stakes in the JVs owned by Yihai Kerry are worth CNY2.3 billion (USD324 million), while those held by Grand Silver Laiyang amount to CNY3.3 billion, according to the results of an asset evaluation. Five of the six produce edible oils, while the other makes plastic packaging containers.

Shares of Yihai Kerry [SHE: 300999] closed 1.2 percent up at CNY25.70 (USD3.62) each in Shenzhen today. In Singapore, Wilmar ended unchanged at SGD3.11 [USD2.39].

China’s edible oil market is vast and highly competitive, with Yihai Kerry, Luhua, and COFCO Fulinmen the dominant players. Founded in 2001, Luhua annually makes 1.5 million tons of edible oil and 300,000 tons of seasonings and is also able to process 500,000 tons of rice and flour a year.

In the first quarter, Luhua reported a net profit of CNY804 million (USD113.2 million) on revenue of CNY5.4 billion. It had a CNY2.7 billion cash flow generated by operating activities as of June 30, according to Yihai Kerry’s announcement.

Grand Silver Laiyang is a 51:49 JV between Yihai Kerry’s controller Wilmar Distribution Hong Kong and China Oil and Foodstuffs.

Editor: Futura Costaglione