COFCO looking for acquisitions
October 24, 2011 Category Mergers & Acquisitions, Weekly
COFCO, China’s largest grains trader, said it is seeking overseas acquisitions to help secure supplies of commodities including soybeans, wheat and sugar as rising domestic incomes spur faster food demand growth. The state-owned company is looking for investments in the U.S., South America, Australia and Russia, Chairman Frank Ning said. He did not identify which companies were being considered. The company may be engaged in farming, logistics, processing, and trading ventures in supplier countries, Ning said. Securing external food supplies is becoming increasingly important after urban household incomes in the country more than tripled in the past decade, fueling consumption of meat, poultry and dairy products. China may have to increase imports because its dependence on the use of ground water for grain production “isn’t going to be sustainable indefinitely,” said Arthur Kroeber, Managing Director of Beijing-based GaveKal Dragonomics Research, a financial advisory firm. But imports also have their limits. China’s 1.34 billion people consume 160 million tons of rice a year, so no country can supply enough if China produces a gap. The biggest exporter, Thailand, only exports eight million tons.
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