Shares of Wilmar International Ltd jumped more than 2 percent after the palm oil firm entered into a joint venture with U.S. cereal maker Kellogg Co to expand in China’s fast-growing breakfast and snack foods market.
Wilmar shares gained as much as 2.5 percent to S$3.27 on Tuesday. Within 90 minutes of trading, some 7.4 million Wilmar shares -- more than half the average full-day volume over the past 30 days -- exchanged hands.
“In the longer term, it’s a positive because it allows them to monetise their extensive distribution network in China. It’s already in place, so it is a matter of moving the goods through the channels,” said Carey Wong, an analyst at OCBC Investment Research.
But Wong noted that the breakfast and snack foods market in China is very competitive and the Chinese may not yet have a tradition of eating cereal, compared with Western countries.
Kellogg said Wilmar will contribute infrastructure, supply-chain scale and its sales and distribution network in China to the 50-50 joint venture. The JV will market Kellogg’s and Pringles branded products, said the maker of Mini-Wheats and Rice Krispies.