COFCO Seeks to Increase Stake in Nidera
China’s COFCO has been involved in an aggressive program of expansion in global grain trading, investing just under $3 billion in 2014 to acquired majority stakes in both Noble Group and Nidera.
Now sources state that the state-run group is looking to build upon these investments, and is reportedly in talks to raise its stake in Nidera by at least an additional 15%. In addition, COFCO is working toward integrating the operations of Nidera and Noble Group with its own, eventually listing the agricultural assets of all three entities together prior to a planned initial public offering (IPO) within the next three to five years. Exchanges being considered for the listing include Singapore, Hong Kong, and possibly a European exchange.
Such a move would shift COFCO into being a member of the elite “ABCD” group of globally dominant agricultural traders, which includes Archer Daniels Midland, Bunge, Cargill, and Louis Dreyfus.
COFCO’s original deal for the acquisition of its stake in Nidera included an earn out clause, which would allow COFCO to increase its stake in the company three years after closing if Nidera meets certain performance requirements. However, current talks are underway to renegotiate the timeline of this clause, bringing the timeframe forward after COFCO made clear it was seeking a larger stake in the company after Nidera missed certain performance targets.
Reuters reports that some sources are claiming that COFCO is seeking to increase its stake in Noble as well, however the Noble deal did not include an earn out clause, and no comment has been issued by Noble on the possibility.