Spanish food group Ebro Foods is in exclusive talks to buy Australia-based Ricegrowers, which trades as SunRice.

The agreement, announced on Wednesday (20 October), gives Ebro exclusivity on the basis of an enterprise value for SunRice of AUS$600m (US$592m).

SunRice is based in New South Wales and sells around 500,000 tons per annum of branded rice foods principally through the retail channel.

Its main markets include Australia, New Zealand, Hong Kong, the Middle East and the US.

SunRice said that, if a definitive proposal is put to shareholders and is consistent with the commercial principles agreed between the two companies, the firm will recommend that shareholders accept the offer – in the absence of a better bid.

“After thoroughly assessing the offer, the board believes that, more than any other option available, it addresses SunRice’s structural constraints on capital raising and the concerns of SunRice and its shareholders that the underlying value of the business is not adequately reflected in its share price,” the firm said.

Over the coming weeks Ebro Foods said it will conduct financial and legal due diligence, negotiate the transaction documents and submit applications for regulatory approval.

Subject to agreement on the final terms of the acquisition, Ebro Foods and SunRice anticipate executing an agreement by next month, with the scheme of arrangement set to be considered by SunRice shareholders in March.

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