M&A: "Global Agribusiness Set for More Deals"

From MoneyBeat:

Singapore-listed Olam, one of the world’s biggest traders in commodities such as nuts, cotton, coffee and cocoa, reported its third-quarter earnings on Thursday–net profit more than doubled from the previous year to 396.1 million Singapore dollars ($316.8 million).

In March, Singapore state investment fund Temasek Holdings Pte. Ltd. made an offer as part of a consortium to buy the remaining 47.5% it doesn’t already own of Olam for about $2 billion, one of a series of mergers and acquisitions moves in the commodities space globally in recent months.

“There will be consolidation in this industry with the growing imbalance that there will be between supply and demand for food,” said Olam CEO Sunny Verghese at a press conference in Singapore. “I think this will be an attractive sector which will attract a lot of capital.” State funds are getting involved now because of food security and other issues, he said.

In Asia, two of the most eye-catching of these deals involved China’s state-owned grain trader Cofco Corp., which in the space of weeks bought Dutch grain trader Nidera NV and then Noble Group Ltd.N21.SG -1.21%’s agribusiness division. Those deals give Cofco direct access to the source of grains in countries in South America and Eastern Europe, allowing it to bypass other traders.

“We’ve seen a shift from industry players acquiring other industry players, to government-linked companies getting into the action,” said Charles Spencer, an analyst at Morgan Stanleyin Singapore....MORE