Singapore group buys up CSR sugar division

By Jane Byrne

- Last updated on GMT

Related tags Tate & lyle

Singapore based Wilmar International, in a surprise deal, will acquire the sugar and renewable energy business of Australian giant CSR for US$1.47bn, a move which trounces the recent bid by Chinese firm Bright Food Group, according to media reports.

CSR’s sugar division, Sucrogen, not only refines and sells sugar, but has also expanded into renewable energy, such as ethanol production, and the sale is expected to generate $1.6bn for the Australian group after expenses and tax liabilities are removed.

Bright Foods had reportedly lowering its conditional bid of $1.75bn for the unit.

Wilmar is listed on the Singapore stock exchange and is one of Asia's largest agribusiness groups, specialising in palm oil cultivation, other edible oils, grains and biodiesel.

Recent acquisitions in the sugar industry would suggest growing consolidation in the sector with American Sugar Refining taking over the refining operations of the UK group Tate & Lyle, last week, and US agribusiness conglomerate Bunge recently acquiring a series of Brazilian mills.

Jonathan Thomas, principal market analyst at market research group, Leatherhead International, told this publication that the divesture of the cane sugar division of the UK sector veteran comes as no great surprise, as its much publicized current strategy is a focus upon value-added sectors.

And he points out that the group, over the last couple of years, has been moving away from international commodity markets, which remain subject to considerable volatility.

In January this year, Phil Spencer, analyst at investment specialist Brewin Dolphin, forecast that any Tate & Lyle gains from the more favourable European sugar market, would, in fact, be partially offset by other factors.

“Tate still has exposure to the highly cyclical paper industry through its industrial starches business, ethanol profitability has collapsed, and the company has mothballed [in the US] one of its two sucralose plants where forecasted demand has not panned out," ​he told our sister publication Food Manufacture​.

While the world sugar price has been extremely volatile over the last nine months, industry insiders now expect it to stay at the currently low level.

And leading industrial chocolate supplier Barry Callebaut, while releasing a trading statement last week, predicted that the sugar price in the regulated EU region, where it mainly sources the commodity, will remain flat.

According to market analysts, although reform of the EU sugar regime has proved painful, it has been ultimately successful in that EU quotas have fallen from around 18.6Mt to around 13.3Mt. EU consumption is fairly stable at around 16.5Mt, with the shortfall made up by imports.

Related topics Commodities Cocoa & Sugar

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