(Paragraph four of this Nov. 15 story has been corrected to make clear that Nordzucker offer is “non legally-binding.”)
By Michael Hogan
HAMBURG (Reuters) - Germany’s second largest sugar refiner Nordzucker is in talks to buy Australian producer Mackay Sugar, a Nordzucker spokeswoman said on Thursday.
Nordzucker said earlier this year that it was considering acquisitions in the changed trading environment after the European Union liberalized its sugar market.
“We have been for some time seeking opportunities to expand our business outside Europe to connect with growth potential and increase our competitiveness,” the Nordzucker spokeswoman said. “This is because sugar (demand) growth is not taking place in Europe but on the world market.”
“We can confirm that negotiations are taking place about a possible shareholding by our company in Mackay Sugar and that we recently submitted a non legally-binding offer.”
Nordzucker declined to give further details.
Nordzucker has offered to buy a stake of up to 70 percent in Mackay Sugar, Mackay said on its website. Both companies are unlisted.
Mackay produces about 800,000 tons of raw sugar annually for the Australian market and for export.
“The final amount of equity and/or debt to be contributed by Nordzucker remains subject to negotiation,” Mackay said.
It added: “The transaction is scheduled to be completed in late March 2019 subject to binding agreement being reached between the parties and the timeliness of all necessary approvals.”
The takeover would require approval by Australian foreign investment authorities and 75 percent of Mackay’s sugar farmer shareholders, the Australian company added.
The European Union liberalized its sugar market in September 2017, ending its system of guaranteed minimum prices and protected production quotas, giving producers freedom to expand and export more and linking EU prices to world markets.
Analysts had expected German sugar producers, because of their financial strength, to launch takeovers in the newly liberalized market.
Nordzucker produces about 2.7 million tons of sugar annually and already has extensive activities outside Germany including Denmark, Sweden, Poland and Belgium.
Reporting by Michael Hogan; editing by Jason Neely and Adrian Croft