CSR mulls new offer from China’s Bright Food

Posted by Nicole Eckersley on 6th April 2010

CSR Limited announced on Thursday that it has received a $1.75 billion dollar conditional offer from Bright Food to acquire CSR’s Sugar and Renewable Energy business, Sucrogen.

A previous offer by the Chinese group of $1.5 billion was turned down in January; however, CSR’s preferred option – a demerger – was blocked by the Supreme Court last month over concerns that the building business alone might not be able to cover potential asbestos liabilities.

The new offer, in addition to an extra $250 million, includes more detail than the first, including regulatory information and “certain positive undertakings” regarding the company’s future Australian operations.

Due diligence for Bright Food’s offer will commence later this month, with CSR opening their books to scrutiny by the Chinese group and their financial advisor Rothschild.

CSR has emphasised that there is no certainty that any transaction will be completed with Bright Food. Sources have described the new takeover offer as ‘an attractive back-up’ for the company in the event that its appeal against the blocked demerger – judgement on which is expected later this month – falls through.

Even a green light by CSR might not be enough to secure the sale – Bright Food would need to satisfy the Foreign Investment Review Board. “The Australian sugar industry is a relatively powerful and vocal group. As such, we would expect that FIRB clearance could be an issue,” JPMorgan analyst Andrew Scott told The Australian.