- Unconventional Ag
COFCO Acquires Remaining Shares of Noble Agri from Distressed Noble Group
Last week, Chinese food production giant COFCO announced it has acquired an additional 49% ownership of Noble Agri from Noble Group for $750 million in cash. Combined with its $1.5 billion purchase of 51% of Noble Agri shares in 2014, COFCO now holds full ownership of Noble Group’s agriculture division. Noble is Asia’s biggest commodity trader by sales and Noble’s agricultural unit stores, processes, and trades sugar, grains, oilseeds, and cotton.
Noble Group committed to the sale in order to generate cash flow after an 84% drop in its third-quarter net profit last month. Threatened by a downgraded investment grade rating to “junk”, Noble Group has used the profit from the sale of its ag division to chip away at its $2.51 billion debt. In addition, the company was forced to recognize a non-cash loss of $546 million from the sale due to the higher, $1.3 billion valuation of Noble Agri in its books. Noble Group’s share price has dropped 61% this year.
The completed acquisition of Noble Agri, combined with the 2014 acquisition of 51% share of Dutch grain trader Nidera, is a strong step toward COFCO’s, “guiding vision: to be a multi-flag world class global agribusiness,”according to CEO Matt Jansen. Currently present in 29 countries, the acquisition of Noble Agri will help expand the company’s global reach. Noble Agri will become COFCO’s overseas purchasing platform, linking the company’s “upstream origination and trading operations with downstream processing and distribution capabilities of COFCO Corporation and its affiliates.”