COFCO to Pay $1.5B for Majority of Ag-sector of Noble Group

COFCO to Pay $1.5B for Majority of Ag-sector of Noble Group

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China’s largest grain trader China National Cereals, Oil and Foodstuffs Corp, or “COFCO,” and mainland private-equity firm Hopu Investment Management Co. have agreed to pay $1.5 billion for a majority of shares from the agribusiness sector of Noble Group Ltd., a Singaporean supplier of agricultural and energy products.

 

china-food-21Experts feel that the deal will lead to better control Chinese food costs. As food demand rapidly increases–especially for dairy and meat products–the Chinese heavily rely on food imports. Each year, the food valuation of China’s imports is about $91 billion, according to the World Trade Organization. (This is just behind the second largest importer, the U.S., valued at $117 billion, and the EU at the top valued at $531 billion.)

 

“It makes all the sense in the world that Cofco, China, wants to be connected somehow,” said Soren Schroder, CEO of ag-company Bunge Ltd., “someway directly to the source.”

 

Here’s what Reuters sums up about what the agreement will mean:

“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 on Wednesday – has risen nearly 25 percent since March 4, when Reuters broke the news that COFCO was in acquisition talks with it, adding about S$2 billion in market value.”

 

The talks have been in the works for some time, but were delayed since early March, according to the Financial Times. Though the deal has been agreed upon, there are still regulatory and share-holder agreements to be signed.

 

FEATURED PHOTO: Alice Henneman/Flickr

 

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