China’s food security guardian Cofco in US$1.1 billion buyout bid for Hong Kong listed unit

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.