A worker checks bottled edible oil at a COFCO Corp plant in Jiujiang, Jiangxi province. The company has agreed to purchase a 51 percent stake in Rotterdam-based grain trader Nidera BV. Provided to China Daily

Yu Xubo, president of COFCO, called the deal "a win-win agreement" for both parties.

Nidera has a strong origination platform in Brazil, Argentina and Central Europe as well as a global trading network, which can further extend COFCO's global presence and create new opportunities, Yu said.

COFCO didn't disclose the transaction cost.

"COFCO is fully committed to supporting Nidera's development through its competitive edge in trading, processing, branding and distribution," Yu said.

With difficulties concerning land, water resources and temperature conditions, it is hard for China to meet the growing demand for certain agricultural products.

Holding a stake in the Dutch company will help COFCO gain direct access to buy oilseed, corn, soybeans and edible oils in South America and further ensure the grain security of the world's most populous country.

"This deal will generate great growth opportunities. The Chinese and Asian markets are of great importance to Nidera," said Ton van der Laan, chief executive officer of the Dutch company.

"We were looking for a strong partner to jointly invest in future growth. Strategic partnership with COFCO is an ideal choice for Nidera and will benefit both sides."

Ning Gaoning, chairman of COFCO, said investing in Nidera is "in line with COFCO's strategy to become a global player in the agricultural industry with a fully integrated value chain. It represents a significant step toward COFCO's global expansion".

Both parties will work together to obtain regulatory approvals and they will make joint plans for post-closing integration.

Under the agreement, the existing shareholders of Nidera will all retain equity stakes in the company. The current leadership and management of Nidera will stay to secure a smooth integration and successful partnership.

"Because of limits on land purchases in countries such as Brazil and Zambia, which have ownership restrictions for foreign companies, COFCO has been focusing on non-grain investment abroad in recent years," said Ding Lixin, a researcher at the Chinese Academy of Agricultural Sciences in Beijing.

"This is COFCO's largest stake purchase over the past five years," Ding said.

COFCO took control of Australian sugar producer Tully Sugar Ltd in 2011, but it lost a bid for Proserpine Cooperative Sugar Milling Association, another Australian company, in the same year. In the wine sector, the company bought Chateau Viaud in Bordeaux, France, in 2011 after a previous purchase in Chile.

To seek more market growth points, the Chinese company has also diversified its business scope into the fields of pig breeding, soybean crushing, edible oil and confectioneries.

zhongnan@chinadaily.com.cn

(China Daily USA 03/03/2014 page16)