Seeking synergy: Itoham Foods chief eyes streamlined production via tie-up

Seeking synergy: Itoham Foods chief eyes streamlined production via tie-up

TOKYO — Major meat processor Itoham Foods expects to improve efficiency in production and distribution through its forthcoming managerial integration with a rival.

     The tie-up with Yonekyu, set for April, is expected to boost operating profit by several billion yen in about three years, Itoham Foods President Mamoru Horio tells The Nikkei.

     Itoham and the meat packer will establish a joint holding company through a stock transfer. The step is likely to generate goodwill totaling tens of billion of yen.

     “We plan to draw out synergy effects exceeding the amortization expenses of goodwill, taking advantage of economies of scale,” Horio said.

     The integration will start in earnest after a final agreement in early November.

     The new entity will aim to exceed 800 billion yen ($6.61 billion) in sales while shooting to surpass 3% in operating profit margin. It will chase industry leader NH Foods, commonly known as Nipponham.

     In Japan, Itoham owns 11 factories and a distribution unit while Yonekyu’s facilities are concentrated in Shizuoka Prefecture. The two will optimize production and logistics by region, such as by producing Yonekyu products at Itoham plants.

     The companies will keep existing factories and staff members. For the time being, they also will maintain separate brands, independently marketing products.

(Nikkei)

Seeking synergy: Itoham Foods chief eyes streamlined production via tie-up