Under the terms of the agreement, COFCO will acquire a 51% stake in Noble Agri Limited 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 of Dec. 31, 2013, Noble Agri had shareholders’ equity of $2.8 billion and net debt of $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 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 will assume the role of chairman of Noble Agri and Richard Elman, founder and chairman of Noble Group, will take on the role of deputy chairman. Yusuf Alireza, chief executive officer (CEO) of Noble Group, will be the interim CEO working closely with the current Noble Agri leadership team.
“Noble Agri’s supply chain management system and origination capabilities complement COFCO’s logistics, processing, and distribution network in China,” Ning said. “Incremental trade volumes from COFCO as a strategic investor will create significant synergy and value.”
“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,” Elman said.
“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,” Alireza said.
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.
Founded in 1949, COFCO has developed from a grains and oilseeds trading company into China’s leading service provider of agricultural products and diversified food services. From trading and processing of grains and oilseeds, COFCO’s value chain has now extended to origination and husbandry, logistics and storage, raw materials processing, biofuels, branded food production and sales, hotels and real estate, financial services, among others.
Established in 1998, Noble Agri is the agriculture platform of Noble Group and mainly engages in agricultural trading and processing business which it originates from low-cost producing regions such as South America, South Africa, East Europe, India, and Australia, to supply regions with high demand, such as Asia and Middle East.
Noble Agri conducts business via three operating segments: Grains and Oilseeds which originates, processes, and distributes grains and oilseeds such as corn, wheat, soybean and vegetable oil; Softs which engages in the trading of soft commodities such as cocoa, cotton, coffee and sugar; and Sugar which is involved in the production of both raw and processed sugar and ethanol, as well as in the operations of sugar mills and the cultivation of sugar cane.
Operating from over 140 locations and employing more than 70 nationalities, Noble Group facilitates the marketing, processing, financing and transportation of essential raw materials.