NSW Sugar Milling Co-operative Open to Bid Approaches -CEO

   By Gillian Tan 
 

SYDNEY--NSW Sugar Milling Co-operative has held talks with potential bidders for the grower-owned business in the wake of a combined US$2 billion worth of deals for Australian sugar producers, and is open to a sale at the right price, Chief Executive Chris Connors said.

Established in 1978, NSW Sugar owns three mills and a 50% stake in a sugar refinery in Australia's New South Wales state. It produces around 270,000 metric tons of raw sugar from more than 2 million tons of crushed cane in a normal crop, Mr. Connors said in an interview with the Wall Street Journal.

"If we get an offer from an equity investor that delivers the right outcomes in terms of ensuring the sustainability of the business, we'd bring it to our growers," Mr. Connors said.

The co-operative--owned by around 600 cane growers--isn't a forced seller, but would welcome domestic or offshore interest from parties that could add skills or expertise and nurture growth, he said.

"The success of our growers, sugar mills and the refinery are very much interwoven," he said, adding that buyers of the group's raw sugar include Nestle SA (NESN.VX) and Coca-Cola Amatil Ltd. (CCL.AU).

"We have a preference to establish a partnership with a party that hasn't invested in Australia before," Mr. Connors said.

That appears to rule out some heavyweight players including Thailand's Mitr Phol Sugar Corp which bought MSF Sugar, Australia's third-largest milling group by output, for 313 million Australian dollars (US$330 million) earlier this year. MSF has an annual crushing capacity of 4.7 million tons of cane and owns four sugar mills in Australia's Queensland state.

In December, Wilmar International Ltd.'s (F34.SG) Sucrogen unit bought Proserpine Cooperative Sugar Milling Association for A$120 million, building on its purchase a year earlier of Sucrogen from CSR Ltd. (CSR.AU) for A$1.75 billion. In July, Chinese state-backed Cofco bought unlisted Tully Sugar for A$136 million. Belgium-based Finasucre's Australian unit Bundaberg Sugar also owns two mills and a refinery in Australia.

NSW Sugar Milling last reported revenue of A$132.5 million according to S&P Capital IQ. That represented a decline from around A$200 million in fiscal 2010, Mr. Connors said.

-Write to Gillian Tan at [e-mail]

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