Cofco close to acquiring controlling stake in Dutch grain trader Nidera

Cofco, a Chinese state-owned food company, is in advanced talks to acquire a controlling stake in Netherlands-based grain trader Nidera.

The move is in line with the Chinese firm’s efforts to secure safer food supplies from overseas.

If a deal is set, Cofco would gain access to grain-growing regions such as Latin America and Russia, and would have greater control over pricing.

Cofco’s takeover plans come in the light of recent food safety scares in the country, which prompted domestic firms to rely on overseas companies for food supplies.

China has been working to gain consumer trust in food safety after a scare in 2008 when raw dairy products contaminated with melamine killed at least six and sickened nearly 300,000 children.

The parties are expected to officially announce the deal on 28 February, reported The Wall Street Journal citing sources familiar with the matter.

According to the sources, Cofco is being advised by HSBC, while ABN Amro is advising Nidera on the transaction.

Established in 1920, Nidera is a privately held commodity service and solutions provider, engaged in processing, merchandising, trading, handling, storage and shipment of agricultural commodities and bio-energy products, and employs approximately 3,800 people across its global operations.

Last month, the newspaper said in a report that the Chinese food gaint was seeking to buy a minority stake worth $250m in Nidera.

Although Cofco is a leading grain trader in China, it has been pursuing the acquisition of smaller assets.

In 2011, the company purchased sugar producer Tully Sugar in Australia for $145m, and it also bought vineyards in Chile and France.

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Image: The deal would provide Cofco with access to grain-growing regions such as Latin America and Russia. Photo courtesy of amenic181 at FreeDigitalPhotos.net.