Charoen Pokpand Foods (CP Foods), Thailand’s largest exporter of shrimp, is negotiating to buy 40 percent stake of Minh Phu Seafood Group Joint Stock Co (coded MPC), Vietnam’s biggest shrimp producer, according to seafood newswire IntraFish.

CP Foods intends to spend about VND1.26 trillion ($60 million), equivalent to VND45,000 ($2.16) per share to buy 28 million shares, or 40 percent stake of Minh Phu.

The price offered by CP Foods is higher than the price of MPC-coded share being traded on stock market by VND9,000 per share. MPC-coded share had price of VND36,900 per share as of October 24, 2012.

Together with CP Foods, many companies from Japan and Middle East are now competing to acquire the shares of Minh Phu.

Answering the information about CP Foods’ acquisition of 40 percent stake, on late October 24, a representative of Minh Phu said the company is now in the process of negotiations to complete the issuance of 30 million shares for foreign strategic investors.

Due to the difficult stock market, Minh Phu has asked for permission from the State Securities Commission (SSC) to extend the issuance time till December 31, 2012.

Representative of MPC did not confirm the details of the deal related to CP Foods.

Earlier, the resolution of the shareholders’ meeting on June 25, 2011 and approval from SSC on June 4, 2012 said that MPC would offer 30 million shares to hike chartered capital from VND700 billion to VND1 trillion and expand business and production activities.

According to analysts, the cooperation between CP Foods and Minh Phu will be an interesting deal because it will allow CP Foods to export shrimp from Vietnam to Europe, avoiding the high export tax related to some terms that will be changed in the EU’s generalized system of preferences (GSP).

If the system changes, GSP would impose the tariffs for raw shrimp at 12 percent instead of the 4.2 percent currently and 20 percent for cooked shrimp, up from the level of 7 percent presently.

In addition, CP Foods can also increase its scale shrimp farming and processing capacity after buying stake in Minh Phu without the need to build infrastructure. These are things that CP Foods will have to do if the company expands its operation in Laos and Cambodia, analysts said.

CP Foods has been operating in Vietnam, but the company is only focusing on feed production for pig and a small portion for shrimp processing. The company’s shrimp processing output reaches about 4,000 to 6,000 tons a year, compared with the figure of 40,000 tons of Minh Phu.