Cofco and Noble Group are to form an agriculture JV

Cofco and Noble Group are to form an agriculture JV

Chinese state-owned agribusiness and food group COFCO is to set up a commodity venture with Singapore conglomerate Noble Group.

COFCO is to take a 51% stake in the Noble Agri venture, with Noble Group retaining 49%.

The venture will be the main way COFCO sources food commodities. "Noble Agri will become the principal international origination platform for COFCO, with its upstream origination and trading operations linked to the downstream processing and distribution capabilities of COFCO and its affiliates in China to create a fully integrated value chain, consistent with COFCO's strategy," COFCO said.

A consortium of international investors led by private-equity firm HOPU Investments will join COFCO as minority co-investors in this acquisition. COFCO will hold two-thirds of the investment vehicle with the balance held by the HOPU-led consortium.

Frank Ning, chairman of COFCO, said: "Noble Agri's supply chain management system and origination capabilities complement Cofco's logistics, processing, and distribution network in China. Incremental trade volumes from Cofco as a strategic investor will create significant synergy and value."

Richard Elman, chairman of Noble Group, added: "We feel confident about our partnership with Cofco and believe that with the financial and business support of our new partners we will accelerate the execution of our strategy."

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COFCO and Noble Announce Creation of an Agribusiness Joint Venture through COFCO’s acquisition of 51% of Noble Agri

April 2,2014, Hong Kong

COFCO Corporation (“COFCO”), a leading supplier of diversified products and services in the agricultural products and food industry in China, and Noble Group Limited (“Noble Group”), a market-leading global supply chain manager of agricultural and energy products, metals and minerals headquartered in Hong Kong, have entered into definitive agreements to form an agribusiness joint venture, Noble Agri Limited (“Noble Agri”).

Under the terms of the agreement, COFCO will acquire a 51% stake in Noble Agri Limited (“Noble Agri”) from Noble Group in an all cash transaction to establish a 51%/49% joint venture.  The transaction values Noble Agri equity at 1.15x 2014 book value. As at 31 December 2013, Noble Agri had shareholders’ equity of US$2.8 billion and net debt of US$2.5 billion. 

Noble Agri will become the principal international origination platform for COFCO, with its upstream origination and trading operations linked to the downstream processing and distribution capabilities of COFCO and its affiliates in China to create a fully integrated value chain, consistent with COFCO’s strategy.

A consortium of international investors led by HOPU Investments (“HOPU”) will join COFCO as minority co-investors in this acquisition.  COFCO will hold two-thirds of the investment vehicle with the balance held by the HOPU-led consortium.Mr. Frank Ning, Chairman of COFCO will assume the role of Chairman of Noble Agri and Mr. Richard Elman, Founder and Chairman of Noble Group, will take on the role of Deputy Chairman.  Mr. Yusuf Alireza, CEO of Noble Group, will be the interim CEO working closely with the current Noble Agri leadership team.

Frank Ning, Chairman of COFCO, said, “Noble Agri’s supply chain management system and origination capabilities complement COFCO’s logistics, processing, and distribution network in China.  Incremental trade volumes from COFCO as a strategic investor will create significant synergy and value.”

Richard Elman, Chairman of Noble Group, commented, “We feel confident about our partnership with COFCO and believe that with the financial and business support of our new partners we will accelerate the execution of our strategy.”

Yusuf Alireza, CEO of Noble Group, commented “We are committed to the continued growth and success of Noble Agri Ltd and the new shareholders of Noble Agri share the vision and passion to build a leading global agricultural firm.”

In the next several months, COFCO and Noble Group will work closely to obtain the relevant regulatory and shareholders approvals required to complete the transaction.

Original source: Cofco