COFCO to buy out agri unit of Noble
Print Edition
CHINA’S largest food company COFCO is to buy 100 percent of the agricultural arm of embattled trader Noble Group, the companies said yesterday.
COFCO, which says it supplies grain and oil to a quarter of the world’s population, bought 51 percent of Hong Kong-based Noble’s agricultural subsidiary in April 2014.
COFCO will now spend US$750 million to buy the remaining 49 percent of Noble Agri, which trades grain, sugar, cotton and coffee in around 30 countries from South America to the Middle East.
The deal is seen as a move by Noble to avoid having its credit rating downgraded to junk. The company said in a statement it would use the proceeds to repay debt.
“It helps Noble to raise the cash it needed to avert being downgraded to junk status, and also to get rid of liabilities,” said Bernard Aw, a strategist at IG Asia Pte.
“It’s critical for Noble to convince investors that it can transform the ailing company.”
The acquisition is the latest move by China’s state-owned companies to expand abroad, usually through purchasing existing overseas businesses.
“The acquisition will greatly accelerate COFCO’s internationalization and global positioning,” its Chairman Ning Gaoning said in a statement.
Noble Agri will be renamed COFCO Agri on completion of the deal.
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