China's COFCO to acquire 51% of commodity trader Nidera

BEIJING (AFP) - China's state-owned grain giant COFCO said Friday it had bought a majority stake in Netherlands-based commodity trader Nidera for a reported US$1.2 billion (S$1.5 billion), as it seeks to become a global player in agribusiness.

COFCO's deal to buy 51 per cent of Nidera, which trades grains and soybeans among other agricultural commodities, is the latest in a string of major overseas investments by Chinese companies seeking to meet rising demand for food and energy in the world's second-largest economy.

The deal would give China greater control over pricing on the world's grain markets as well as better access to major grain-growing regions, such as Latin America and Russia, Dow Jones Newswires reported.

Financial terms of the COFCO-Nidera deal, which awaits regulatory approval, were not disclosed while the press release described Nidera as having "annual turnover in excess of US$17 billion".

"Investing in Nidera is in line with COFCO's strategy to become a global player in the agricultural industry ... and represents a significant step towards COFCO's global expansion," Frank Ning, COFCO's chairman, said in a press release.

Nidera's total enterprise value is about US$4 billion, Dow Jones Newswires reported citing people familiar with the matter, adding that the equity value of COFCO's stake is about US$1.2 billion.

Nidera's operations in Brazil, Argentina and Central Europe and global trading network "can further extend COFCO's global presence and create new opportunities," Patrick Yu, COFCO's president, said in the release.

As China's population grows wealthier, foreign companies are widely seen by consumers as offering safer and higher quality products in contrast to a climate of constant food safety scares in the fast-growing Asian economy.

Ton Van Der Laan, CEO of Nidera, said the deal would "generate great growth opportunities", emphasising the importance of Chinese and Asian markets for the company.

"We were looking for a strong partner to jointly invest in future growth and a strategic partnership with COFCO is an ideal choice for Nidera and will benefit both sides," Van Der Laan said.

China's overseas investment rose 16.8 per cent to US$90.17 billion in 2013 as its companies bought more foreign assets, particularly in energy and resources, to power its economy.