Cofco and Noble Form $1.5bn Agribusiness Deal
02 Apr 2014 --- COFCO Corporation, a leading supplier of diversified products and services in the agricultural products and food industry in China, has bought a 51% stake in the Hong Kong-based Noble Group Limited, a market-leading global supply chain manager of agricultural and energy products. This is the second major acquisition for COFCO this year, as it seeks to strengthen its global position and tap into the booming grain market, fuelled by an increased demand for meat and protein.
The two companies have entered into definitive agreements to form an agribusiness joint venture, Noble Agri Limited. Noble Agri will become a global platform for COFCO, linking its grain processing business in China with Noble’s grain sourcing and trading capabilities.
Frank Ning, Chairman of COFCO, said, “Noble Agri’s supply chain management system and origination capabilities complement COFCO’s logistics, processing, and distribution network in China. Incremental trade volumes from COFCO as a strategic investor will create significant synergy and value.”
China is experiencing high demand for grains such as soybeans and corn for use as animal feed, as the growing band of middle class citizens continue to add more meat to their diets. COFCO has been working hard to grow its share of this thriving market. In February this year the company acquired a 51% share of the Dutch business Nidera in order to tap into South American grain and oilseed supplies.
Under the terms of the agreement, COFCO will acquire a 51% stake in Noble Agri Limited (“Noble Agri”) from Noble Group in an all cash transaction to establish a 51%/49% joint venture. As at 31 December 2013, Noble Agri had shareholders’ equity of US$2.8 billion and net debt of US$2.5 billion.
Richard Elman, Chairman of Noble Group, commented, “We feel confident about our partnership with COFCO and believe that with the financial and business support of our new partners we will accelerate the execution of our strategy.”
Yusuf Alireza, CEO of Noble Group, commented “We are committed to the continued growth and success of Noble Agri Ltd and the new shareholders of Noble Agri share the vision and passion to build a leading global agricultural firm.”
A consortium of international investors led by HOPU Investments (“HOPU”) will join COFCO as minority co-investors in this acquisition. COFCO will hold two-thirds of the investment vehicle with the balance held by the HOPU-led consortium. Mr. Frank Ning, Chairman of COFCO will assume the role of Chairman of Noble Agri and Mr. Richard Elman, Founder and Chairman of Noble Group, will take on the role of Deputy Chairman. Mr. Yusuf Alireza, CEO of Noble Group, will be the interim CEO working closely with the current Noble Agri leadership team.
In the next several months, COFCO and Noble Group will work closely to obtain the relevant regulatory and shareholders approvals required to complete the transaction.
Founded in 1949, COFCO has developed from a grains and oilseeds trading company into China’s leading service provider of agricultural products and diversified food services. COFCO is committed to creating an agricultural and food company with an integrated value chain that connects farms to households and creates a full-service urban system, and to utilizing sustainable natural resources to provide nutritious, premium-quality products.
From trading and processing of grains and oilseeds, COFCO’s value chain has now extended to origination and husbandry, logistics and storage, raw materials processing, biofuels, branded food production and sales, hotels and real estate, financial services, among others. COFCO is committed to building its core competencies in each stage of the value chain and maximizing value for our stakeholders, customers and employees.
As a widely recognized global company, COFCO has been awarded as one of the “Fortune 500” companies for 20 consecutive years, the only Chinese agri-food enterprise on the list. COFCO’s revenues in 2012 were US$34Bn.
The Noble Group’s grains and oilseeds operations focus on South America, Europe and Asia. The company has three oilseed processing factories in Asia and it supplies grains, oilseeds and vegetable oil throughout Asia from Singapore.
by Sonya Hook
