Shares of China Agri-Industries Holdings surged as much as 28.7 per cent, the highest in 31 months, after state-owned parent Cofco (Hong Kong) launched a HK$8.9 billion (US$1.1 billion) bid to take the company private as it looks to pursue a flexible development strategy. Cofco (HK), tasked with enhancing the nation’s food security, has offered to buy the shares it does not already own for HK$4.25 each in cash, a 34 per cent premium to the last traded price before trading was halted on Monday. It owns 60.75 per cent of China Agri. “The proposal will enhance the offerer’s comprehensive consolidation and integration of [China Agri’s] operations, giving the offerer more flexibility and higher efficiency in supporting the long-term business development [of both companies],” China Agri said in a filing to Hong Kong stock exchange on Thursday morning. Cofco (HK) in turn is a wholly-owned offshore subsidiary of 70-year-old Cofco Group, China’s largest supplier and a key importer of agricultural and food products. Its purchases of soybeans are likely to form a key part of the US-China trade deal being negotiated. China, the world’s biggest soybean importer, has cut off purchases from the US last year by slapping tariffs of 25 per cent tariff, sending prices tumbling. Cofco (HK) owns stakes in five Hong Kong-listed and one Shenzhen-listed firms, spanning agricultural products trading and processing, manufacturing and packaging of branded consumer food, logistics and storage, and property investment and development. Some 55 per cent of Cofco (HK)’s revenues last year came from global commodities supply chain management, while 28 per cent was from the sale of agriculture products, 8 per cent from biofuel and biochemical products, 5 per cent from food and drink and the rest from property and wine businesses, according to Moody’s. The privatisation of China Agri, a major processor and trader of oilseeds, rice, wheat and malt, comes as the US-China trade war and global economic slowdown has depressed its shares’ value. “The slowdown of global economic growth, trade tensions and heightening of geopolitical risks have resulted in the underperformance of the company’s share price,” it said. “The ability of the company to raise funds from the capital markets has come under a certain degree of restriction.” China Agri posted a 40.2 per cent year on year decline in net profit to HK$448.8 million in the year's first half, even as revenue grew 27 per cent. The fall was due largely to a profit margin squeeze in its mainstay oilseeds processing business on the back of poor demand for soybean meal used by the animal feed industry as a severe Africa swine fever epidemic rages on in China. China Agri closed Thursday’s morning trading session 27.4 per cent higher at HK$4.04, but the shares are still 27 per cent below their book value.