SYDNEY/SINGAPORE Singapore's Wilmar International Ltd (WLIL.SI) on Monday struck a surprise deal to buy Australian conglomerate CSR Ltd's sugar business for A$1.75 billion ($1.47 billion), trumping China's Bright Food Group.
Shares in CSR (CSR.AX), the world's fifth-largest sugar-refiner, climbed more than 4 percent after CSR announced it had agreed to sell the sugar arm to Wilmar, the world's largest listed palm oil producer.
Bright Food, which has been chasing CSR since January, was not expected to come back with a higher offer, according to two sources close to the transaction. CSR had also held talks with several other interested bidders, they said.
"The deal is done, there is no real opportunity for them (Bright Food) to come back to raise their offer," one of the sources said.
Wilmar's purchase price was A$1.347 billion for equity and A$403 million for debt, 6 percent higher than a conditional A$1.65 billion offer Bright Food made to CSR's board late last week.
The deal was a coup for conglomerate CSR which has spent more than a year working on plans to either spin-off the sugar business into a separately listed company, or sell the asset.
Until the Wilmar bid, the market was unaware of any other bidders looking at the asset.
WILMAR'S SUGAR PUSH
Wilmar said the deal was part of plans to expand its sugar business.
"This is positive news as it'll help jump start their strategy to expand in the sugar business and (represents) the next growth driver for Wilmar," said DBS Vickers analyst Ben Santoso.
He added that acquiring CSR's sugar business would also give Wilmar expertise in cane-related research and development.
Santoso expected the new business to see synergies from capitalizing on Wilmar's extensive distribution to China and Asia.
In Singapore, Wilmar's shares rose as much as 2.3 percent.
CIMB analyst Ivy Ng said the deal was positive in the medium term because it gave Wilmar knowledge to expand to other parts of Asia.
"But in the short term, based on what they have so far it does not appear the acquisition will significantly increase their earnings," said Ng.
"In the longer term, it would be good if they can replicate the business in other parts of Asia like China, India and Indonesia, but you won't see that tomorrow."
CSR said the deal was expected to be completed by the last quarter of 2010, and is conditional on approval by Australia's Foreign Investment Review Board (FIRB).
In May, FIRB delayed its decision on the Bright Food bid for up to 90 days, which raised concerns the bid may be blocked.
CSR said net proceeds from the deal would be about A$1.6 billion, and it would consider a range of options for the funds.
(Additional reporting by Harry Suhartono in Singapore; Editing by Ed Davies and Dhara Ranasinghe)