Snow Brand Milk Products Co., the parent company of scandal-hit Snow Brand Foods Co., announced Thursday an outline of its restructuring plan that includes capital tieups with trading house Itochu Corp. and the National Federation of Agricultural Cooperative Associations (Zen-Noh).
The major dairy firm is also asking domestic and foreign-affiliated food makers, including the Japanese unit of Swiss-based food maker Nestle SA., to participate in capital alliances, company officials said.
If the company concludes its current round of negotiations, more than half of Snow Brand Milk’s outstanding shares will be owned by outside companies, with the total new equity injection by the capital alliances reaching 30 billion yen, it said.
Snow Brand Milk President Kohei Nishi also announced that the current management team will be replaced at its general shareholders meeting in June.
“Our company’s existence is questioned by consumers after a series of scandals,” Nishi said. “To regain the public’s trust, we need to refresh this management team and revitalize our corporate culture.”
The major dairy maker also said the same day that it will write off 52 billion yen this fiscal year and report net losses of 70.5 billion yen, up from an initial forecast of 22 billion yen.
Snow Brand Milk has been trying to revive itself since a food-poisoning scandal in the summer of 2000. But a meat-mislabeling scandal by Snow Brand Foods, which surfaced in January, dealt an additional blow to the parent firm.
The new restructuring plan is designed to strengthen the firm’s financial foundation, Nishi said, adding Zen-Noh is expected to become the largest shareholder in the firm.
Snow Brand Milk will concentrate on dairy products such as butter and cheese and spin off peripheral businesses by selling them off and setting up joint ventures, Nishi said.
According to a company executive, this will see the firm’s sales and workforce reduced by two-thirds.
For its milk drink business, the firm will set up a joint venture with with Zen-Noh and the National Federation of Dairy Cooperative Associations (Zenrakuren).
Snow Brand Milk’s profitable food wholesale subsidiary Yukijirushi Access Inc., will be partly sold to Itochu and major food wholesaler Kokubu & Co.
Snow Brand Milk is also negotiating with several firms to form a partnership for its ice cream business and is planning to set up a joint venture with Nestle Japan Ltd. for its baby food operations.
By carrying out these measures, about 3,000 employees will be cut from Snow Brand’s workforce — 66 percent of Snow Brand Milk’s current workforce — will be laid off or transferred to other companies.
Sales at Snow Brand Milk have declined in the two years since the food-poisoning outbreak, in which some 15,000 people became sick after consuming tainted Snow Brand Milk products.
The firm was dealt another blow when the meat mislabeling scandal involving Snow Brand Foods surfaced in late January. The subsidiary falsely labeled imported meat as domestic to get government subsidies related to the outbreak of mad cow disease in Japan in September.
Snow Brand Foods, owned 65 percent by Snow Brand Milk, will be disbanded at the end of April due to a sharp decline in sales in the wake of the scandal.
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