Associated British Foods Mulls China Sugar-Business Sale for Up to $1 Billion
10 Mayo 2016 - 2:33AM
Noticias Dow Jones
By Kane Wu in Hong Kong and P.R. Venkat in Singapore
British food and retail group Associated British Foods PLC is
considering a sale of its China sugar business that could fetch $1
billion, according to people familiar with the situation.
The company is inviting bids for its AB Sugar unit's China
business, which was established in 1995 via a joint venture and now
has factories and mills in southern and northern China, one of the
people said.
The potential sale could attract domestic Chinese buyers, who
are looking to invest more in agricultural commodities, according
to people familiar with the situation. Bids are due by the end of
May, they said.
Sugar consumption in China is slowing amid weak overall economic
growth, and production costs have climbed higher with wage
increases.
ABF, which is the sixth-largest sugar producer in China by
capacity, scaled back its China operations last year. The British
company sold two of its factories in northern China's Heilongjiang
province in 2015. It took a noncash charge of GBP100 million ($144
million) when it ceased operations in the province.
In April, the company signaled that its business in China was
improving after it closed the factories and raised prices.
Operational performance at two beet-sugar factories, in Zhangbei
and in Qianqi, was strong with 159,000 metric tons of sugar
produced. In the South, production was 31% lower than last year at
287,000 metric tones, due to a combination of a smaller area
assigned to the cane crop, excessive rain affecting cane maturity
and the poor sugar content that resulted.
Chinese companies have been expanding in the agricultural
industry at home and abroad in recent months. Sinochem Group,
China's biggest seller of seeds and fertilizer, in March made an
offer to buy Singapore's natural rubber supply-chain manager
Halcyon Agri Corp. and combine it with other units to create the
world's largest listed rubber company.
In December, state-backed grain trader Cofco agreed to buy Noble
Group's remaining stake in their joint venture Noble Agri for $750
million.
ABF currently operates five cane-sugar mills in southern China's
Guangxi Province and two beet-sugar factories in the Northeast of
the country with an annual sugar capacity of more than 800,000
metric tons, according to the company's website.
ABF was one of the earliest Western companies to invest in China
when a subsidiary put money into the country's yeast production in
1985.
It has established more than 50 legal entities in China with a
total investment of more than 6 billion yuan ($922 million) and
employs more than 10,000 people, with business interests in other
sectors such as agriculture, individual ingredients and nutritional
foods.
Lucy Craymer and Ed Ballard contributed to this article.
(END) Dow Jones Newswires
May 10, 2016 03:18 ET (07:18 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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