COFCO buys majority stake in Noble unit
Print Edition
COFCO Corp has agreed to pay US$1.5 billion for a majority stake in Noble Group Ltd’s agribusiness, its second acquisition in less than two months, as China’s largest grain trader seeks to strengthen its market position worldwide.
The two firms said yesterday that they plan to form a joint venture, in which COFCO will own 51 percent, to link its grain processing and distribution business in China with Noble Agri’s grain sourcing and trading arms.
The move will help China develop a powerful agricultural trading house along the lines of its Unipec oil trading business, one of the world’s biggest buyers of crude oil, as it seeks to shore up supplies of animal feed grains to meet soaring demand for high-protein food.
“We can source ample, and low-cost, grains by direct purchases from farmers in major grain-growing countries,” said Cheng Guoqiang, a researcher with the State Council Development and Research Center, the think-tank of China’s Cabinet.
COFCO’s participation in the global grain trade will also help China better track the world grain market, Cheng added.
The deal adds volume to Noble’s trading business via COFCO and allows it to reduce debt. Noble’s stock, which jumped as much as 5 percent yesterday, has risen nearly 25 percent since March 4, when Reuters broke the news that COFCO was in acquisition talks with it, adding about US$2 billion in market value.
China is seeing massive expansion in demand for grains such as soybeans and corn.
COFCO bought a 51 percent stake in Dutch trader Nidera in late February to gain direct access to South American grain and oilseed supplies in a deal that valued Nidera at US$4 billion including debt.
The two deals mark the biggest overseas purchases in China’s grain sector — a total US$2.8 billion investment, COFCO said in a statement.
The firm will own high-quality assets in the world’s top grain and vegetable oil producing regions, including Brazil, Argentina, Indonesia and the Black Sea area, following these deals, COFCO said.
The deals follow a wave of consolidation in the world agribusiness sector that has shrunk the number of potential acquisitions for it to bulk up enough to compete globally with larger rivals ADM, Bunge Ltd, Cargill Inc and Louis Dreyfus Corp, known as the ABCD.
Buying Noble allows COFCO to bring food supply into China without having to go through the ABCD pipeline, and will allow it to control costs better.
“By pushing the international strategy, COFCO will set up a stable grain corridor between the largest global grain-growing origins and the biggest global emerging market, in terms of grain consumption growth in Asia,” COFCO Chairman Frank Ning said in a statement.
- About Us
- |
- Terms of Use
- |
-
RSS - |
- Privacy Policy
- |
- Contact Us
- |
- Shanghai Call Center: 962288
- |
- Tip-off hotline: 52920043
- 沪ICP证：沪ICP备05050403号-1
- |
- 互联网新闻信息服务许可证：31120180004
- |
- 网络视听许可证：0909346
- |
- 广播电视节目制作许可证：沪字第354号
- |
- 增值电信业务经营许可证：沪B2-20120012
Copyright © 1999- Shanghai Daily. All rights reserved.Preferably viewed with Internet Explorer 8 or newer browsers.
