Bloomberg News

Thailand’s Mitr Phol Makes Cash Offer for Rest of MSF Sugar

November 09, 2011

(Updates with analyst comment in fourth paragraph.)

Nov. 9 (Bloomberg) -- MSF Sugar Ltd. shares rose to the highest on record after Mitr Phol Sugar Corp., a closely held Thai sugar miller, offered to buy the shares it doesn’t already own in the Australian producer, valuing the company at A$313 million ($323.7 million).

Mitr Phol, which owns 22 percent of MSF, is offering A$4.45 a share in cash, 31 percent higher than its last closing price, Gordonvale, Queensland-based MSF said today in a statement. Shares surged 30 percent to A$4.41 at the close in Sydney, the highest since April 30, 1976.

The Thai miller has joined Bunge Ltd., the world’s second- largest sugar trader, and Singapore-based Wilmar International Ltd. in seeking sugar assets in Australia, the third-largest shipper of the sweetener, to meet rising Asian demand. Cofco Ltd., China’s largest grains trader, won control of Tully Sugar Ltd. in July and is seeking to acquire Proserpine Co-operative Sugar Milling Association Ltd.

“We wouldn’t be surprised if a bidding war emerged for MSF, as we’ve seen with every other sugar asset,” said Belinda Moore, a Brisbane-based analyst with Royal Bank of Scotland Group Plc. “We always expected that MSF would go at some point. Mitr Phol was the logical buyer, given they paid A$4 a year ago for about 19.9 percent.”

MSF’s board intends to recommend the offer in the absence of a superior proposal and subject to an independent expert report to determine that the offer is fair and reasonable, Chairman James Jackson said in a statement. The company will be able to tap growth opportunities in sugar in Australia and Asia, he said.

MSF owns four sugar mills with a total crushing capacity of about 4.7 million metric tons of cane producing around 550,000 of raw sugar each year, according to its website.

“We’ve seen a lot of consolidation in the sector of late,” Moore said in a phone interview. “What we’ve seen is quite strong bidding tension and bidding wars for these sugar assets and big premiums being paid.”

Wilmar, the world’s biggest palm-oil processor, won control of CSR Ltd.’s Sucrogen sugar division in July 2010 with a A$1.75 billion bid, trumping an offer from China’s Bright Food Group Co. Tully Sugar increased its cash offer price for Proserpine to A$122 million on Nov. 7.

Mitr Phol’s offer is conditional on 50.1 percent acceptance and approval from Australia’s Foreign Investment Review Board, according to today’s statement. The bid also requires approval from Thai regulatory authorities, it said.

Australia may produce 3.8 million tons of sugar in the 2011-2012 season, Australia & New Zealand Banking Group Ltd. said last week. Exports may total 2.6 million tons, it said.

MSF is being advised by Greenhill Caliburn and Mallesons Stephen Jaques.

--Editors: Rebecca Keenan, Ryan Woo

To contact the reporters on this story: Phoebe Sedgman in Melbourne at psedgman2@bloomberg.net; Soraya Permatasari in Melbourne at soraya@bloomberg.net

To contact the editors responsible for this story: Rebecca Keenan at rkeenan5@bloomberg.net; Andrew Hobbs at ahobbs4@bloomberg.net


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