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SATS will partner Japanese trading and investment company Mitsui & Co to develop and grow their respective food and retail solutions businesses.
A new wholly owned subsidiary has been established as a holding vehicle through which the two will jointly pursue potential food solutions-related investments, the airport-services provider said in a bourse filing on Thursday (Jul 18).
As part of the deal, Mitsui will pay about S$36.4 million for a 15 per cent stake in the subsidiary, Food Solutions Sapphire Holdings, which will include four of Sats’ indirect wholly owned food solutions entities.
The amount also accounts for certain loans and bonds related to Sats’ food solutions entities.
The deal was made on a willing-buyer, willing-seller basis, taking into consideration the current financial position and future growth prospects of the four entities, Sats said.
The company said its “strategic collaboration” with Mitsui aims to “enhance the food value chain” of both companies by leveraging Mitsui’s global network and Sats’ expertise across the entire process, from raw material procurement to end-customer delivery.
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The partnership will focus on expanding the food solutions business in key Asian markets through joint initiatives in product development, central kitchen production and distribution logistics, said Sats.
The aim is to unlock new opportunities and expand Sats’ market reach, “boosting volumes” for the company’s operations and optimising asset utilisation rates, it said.
The move is not expected to have any material impact on the group’s consolidated net tangible assets per share or consolidated earnings per share for the current financial year ending March 2025.
In the meantime, Sats said the partnership is already yielding tangible results, especially in Mitsui’s home market, Japan.
“Several joint initiatives are currently in progress,” it said. For instance, a Sats subsidiary is in discussions with a food services subsidiary under Mitsui Group to supply food components.
The same Sats subsidiary has also begun supplying food components to prominent retail channels – including Kinokuniya and JR East.
Additionally, plans are in progress to supply frozen meals to Muji Japan, with a targeted launch in Q1 2025.
Stanley Goh, Sats chief executive, said the company already has the capacity and expertise to “ideate, innovate and manufacture” a wide range of high-quality ready-to-eat food products.
Goh believes that the partnership will not only spur demand for Sats’ products in Asia, it will also support Mitsui’s goal of “providing and scaling value-added services to their customers”.
Mitsui managing officer and chief operating officer of retail business, Naoharu Asaumi, added: “Mitsui and Sats aim to provide food solutions to a growing market and contribute to enriching the quality of life for the communities in Asia. (Combining both companies’ expertise), we can scale this ambition.”
Sats shares closed at S$3.26 on Thursday, down 0.3 per cent or S$0.01, before the announcement.
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