COFCO, the Chinese state-owned integrated food chain organisation, has agreed to acquire the whole equity in the troubled Noble Group’s Agriculture division in which it held a 49% stake, subject to approval from Noble shareholders. This follows its earlier 2014 investment in the Nidera business.
Hong Kong-based Noble says the deal is worth $750 million in cash, plus the retention of upside participation in the future growth of Noble Agri worth up to $200 million. It intends to use the proceeds to pay down debt.
Noble has been hit by deflating commodity and energy market values, and in October pledged to raise over $500 million from asset disposals and strategic financial transactions to maintain its investor grade rankings. It says the Agri transaction “comfortably exceeds” this commitment.
COFCO acquired the 51% controlling interest in Noble Agri in April 2014, when it was then reported to be worth $2.8 billion, but with net debt of $2.5 billion. Adjusted net debt at the end of September 2015, after incorporating the transaction proceeds, would have been a pro forma $1.8bn with cash on hand of $2bn – thought to be sufficient to maintain the Group's credit rating.
“We are delighted to have been able to enhance our liquidity significantly while also delivering on our commitments,” notes Noble Group chief executive Yusuf Alireza. “The structure of the transaction, over and above the cash receipts, allows us to participate in the continued build-out of a world class multi-flagged global agri business.”
• In March 2014, COFCO acquired a 51% stake in Nidera, the privately-owned global shipper, commodity trader and agribusiness company headquartered in Rotterdam for an estimated $4bn. The Nidera UK subsidiary based at Ipswich has made two acquisitions in 2015 – Grainseed in March and Criddle & Co in November.