PARIS (Reuters) - Global trading house Louis Dreyfus Company is to buy an oilseed crushing and vegetable oil refining business in China from Singapore-based Golden Agri-Resources (GAGR.SI), extending its presence in the world’s biggest oilseed importing country.
A Louis Dreyfus subsidiary is to buy Sinarmas Natural Resources Foodstuff Technology (Tianjin) Co. from a subsidiary of Golden Agri-Resources on the basis of an enterprise value of $111 million, Golden Agri-Resources said in a filing on Monday. The final price is subject to adjustment, the filing said.
The business being acquired by Louis Dreyfus owns and operates oilseed crushing and refining facilities in the northeastern Chinese port city of Tianjin.
Like its rivals, Dreyfus has been grappling with declining margins linked to high levels of supply and reduced price volatility, leading it to spin off some businesses and focus on core activities including grains and oilseeds.
A Louis Dreyfus spokeswoman said the deal reflected the group’s confidence in the Chinese agricultural processing sector, without giving further financial details.
The ABCD merchants are facing competition from China’s state-owned COFCO Corp, whose international trading arm is looking to expand direct sourcing from farmers worldwide and reduce its reliance on foreign trading houses.
Golden Agri-Resources, which is one of the world’s largest palm-oil plantation owners, said the sale was a strategic decision to sell a non-core oilseed asset.
The agreement is subject to regulatory approval.
Reporting by Gus Trompiz. Editing by Jane Merriman