Bright snubbed: CSR’s Sucrogen goes to Wilmar International
CSR Limited has announced the sale of its newly spun-off sugar business, Sucrogen, to Singaporean agribusiness giant Wilmar International, for A$1.75 billion, rejecting previous offers from China’s Bright Food Group, including a conditional offer at the same amount. The company has also rejected its preferred option, a demerger, despite winning an appeal which would green-light the project.
“The sale of Sucrogen to Wilmar achieves CSR’s objective of separating its two very different operating businesses,“ said CSR Chairman Dr Ian Blackburne. “We have been working towards this objective for some time and having explored a number of strategic alternatives, the Board believes a sale to Wilmar is in the best interests of shareholders and stakeholders in CSR.”
Wilmar International Ltd, a major player in the edible oils market, has interests in oil palm cultivation, oilseed crushing, specialty fats, oleochemicals and biodiesel manufacturing. It operates in 20 countries, primarily focusing on Indonesia, Malaysia, China, India and Europe, and has been criticised for its link to palm oil deforestation.
Wilmar plans to use Sucrogen to expand into the sugar market throughout Asia, where demand is strong, and continues to be driven by the sweet tooth of developing markets, and the company does not anticipate any immediate change in the day-to-day operations of CSR’s sugar business.
“Sucrogen has a good strategic fit with Wilmar’s existing portfolio of high quality, processed agri-products. Wilmar will work with Sucrogen’s management to create synergies and to pursue growth strategies in Indonesia and other high potential Asian markets, utilising Sucrogen’s proven expertise across the entire sugar value chain and market-leading position in Australia,” said Wilmar’s Chairman and CEO, Mr Kuok Khoon.
“Wilmar also recognises the extremely important role of all stakeholders in the Australian industry who helped build Sucrogen’s success.”
Sucrogen will likely prove a bargain for Wilmar. “Sucrogen is the largest producer of raw sugar in Australia and, through QSL, the second largest exporter of raw sugar globally. In Australia, it owns and operates high-quality infrastructural assets, which include the largest holding of sugar mills in the country (located in the highest yielding cane-growing regions) and a unique network of 1,250km of cane rail stretching from farm-gate to mill and mill to port, providing it with significant logistical cost advantages. As a result, Sucrogen is one of the world’s lowest cost producers of sugar and iscompetitive with producers in Brazil’s central south region on a delivered basis.”
“Furthermore, because of its proximity to Asia (which is a net importer of sugar) and the high quality of Australian sugar, Sucrogen via QSL has been able to achieve a ‘Far East premium’ over global sugar prices.”
The sale of Sucrogen remains subject to approval by the Foreign Investment Review Board and the Overseas Investment Office (NZ).