Tingyi considers acquisitions with US$1.6b war chest

Tingyi (Cayman Islands), PepsiCo's Chinese partner, is considering buying instant food businesses to boost growth after annual sales expanded at the slowest pace in eight years.

The maker of Master Kong brand ready-to-drink teas and snacks is seeking acquisitions, and will likely form a new strategic alliance next year, said chief financial officer Frank Lin, declining to provide details.

The firm is considering both domestic and overseas brands for deals and co-operations, he said.

Tingyi has formed ventures with PepsiCo, Asahi and others in the past three years to win customers as rising incomes on the mainland boost consumption.

The Tianjin-based company can leverage its US$1.6 billion of cash for acquisitions to stave off competition from global food companies such as Nestle.

"For the instant food business, we choose M&A instead of organic growth because it's faster to expand our presence in the China market," Lin said. No final decision has been made on the acquisition and alliance plans, and Tingyi will focus on deals on the mainland over the next five years, he said.

Tingyi's Hong Kong-listed company has gained 7.4 per cent this year, compared with a 5.5 per cent increase in the benchmark Hang Seng Index.