Itochu Corp on Thursday entered into a $1 billion tie-up with Thai billionaire Dhanin Chearavanont's Charoen Pokphand Group, targeting rising demand for meat and livestock products in China and elsewhere in Asia.

Japan's third-largest trading house is cementing ties with a company that has large business operations in China, where Itochu already has a significant presence through its $1.7 billion acquisition of Dole Foods units last year and a stake in a major Chinese food distribution company.

Itochu said in a statement that it will sell ¥102.4 billion of shares, equal to a 4.9 percent stake, to two units of Charoen Pokphand. One of the units has the Development Bank of Japan as a partner.

The transaction, which will make the Thai group Itochu's third-biggest shareholder, prices the shares at ¥1,313. That compares with the market closing price on Thursday of ¥1,315.

The funds raised will mostly be used to buy a 25 percent stake in Hong Kong-listed C.P. Pokphand Co from Charoen Pokphand Foods PCL. Both companies are units of Charoen Pokphand Group.

The rest of the proceeds from the issuance of shares will be used as funds for investment and general spending on joint businesses in Asia, Itochu said.

Itochu said it will buy back as many as 78 million of its own shares, the same amount to be issued to Charoen Pokphand group, avoiding shareholder dilution.