Sats partners with Japan’s Mitsui to expand its food solutions business

SAT will partner with Japanese trading and investment company Mitsui & Co to develop and grow their respective food solutions and retail businesses.

A wholly-owned subsidiary has been established as a portfolio vehicle through which the two companies will jointly pursue potential investments related to food solutions, the airport services provider said in a stock exchange filing on Thursday (July 18).

Under the deal, Mitsui will pay approximately S$36.4 million for a 15% stake in the subsidiary, Food Solutions Sapphire Holdings, which will comprise four of Sats’ indirectly wholly-owned food solutions entities.

This amount also takes into account certain loans and obligations related to Sats’ food solutions entities.

The deal was concluded on a willing buyer and willing seller basis, taking into account 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 throughout the process, from raw material sourcing to delivery to the end customer.

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, Sats said.

The aim is to unlock new opportunities and expand Sats’ market reach by “increasing volumes” of the company’s operations and optimising asset utilisation rates, he said.

This decision is not expected to have a 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.

At the same time, Sats said the partnership is already producing tangible results, particularly in Mitsui’s home market of Japan.

“There are several joint initiatives currently underway,” he said. For example, a Sats subsidiary is in talks with a food service subsidiary of the Mitsui Group to supply food components.

The same Sats subsidiary has also started supplying food components to major retail channels including Kinokuniya and JR East.

Additionally, plans are underway to supply frozen meals to Muji Japan, with a planned launch in Q1 2025.

Stanley Goh, Sats’ managing director, said the company already has the capacity and expertise to “imagine, innovate and manufacture” a wide range of high-quality ready-to-eat food products.

Goh believes the partnership will not only boost demand for Sats products in Asia, but also support Mitsui’s goal of “providing and developing value-added services to its customers.”

Naoharu Asaumi, Managing Director and COO of Mitsui Retail Division, added: “Mitsui and Sats aim to provide food solutions to a growing market and contribute to enriching the quality of life of communities in Asia. (By combining the expertise of both companies), we can realize this ambition.”

Shares in Sats closed at S$3.26 on Thursday, down 0.3% or S$0.01, ahead of the announcement.