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Bunge trains sights on SE Asia growth through Loder acquisition

Post a commentBy RJ Whitehead , 14-Sep-2017
Last updated on 19-Sep-2017 at 10:38 GMT2017-09-19T10:38:32Z


Bunge has acquired a majority stake in Malaysian palm planter IOI Corporation’s Loder Croklaan subsidiary, through which it hopes to gain a bigger footprint in Southeast Asia.

The US agribusiness major paid US$946m for a 70% share in the Netherlands-based oil and fat business to expand Bunge’s “value-added capabilities, reach and scale across core geographies to establish it as a global leader in B2B oil solutions,” it said in a statement.

Loders will retain its brand and operate as part of Bunge’s Food & Ingredients business, with key management team members expected to remain with the combined business.

Bunge has entered into a US$900m, unsecured, delayed draw, three-year term loan agreement with Sumitomo Mitsui Banking Corporation to finance the transaction, which is expected to close in the next 12 months.

The acquisition will also help Bunge diversify its manufacturing and R&D network into core regions, especially Southeast Asia.

Loders’ portfolio includes a wide range of palm and tropical oil-derived products, with strength in confectionery, bakery and infant nutrition applications. With customers in more than 100 countries, it made US$1.6bn in sales last year.

This complete seed and tropical oil portfolio will position Bunge to be a full-service partner and uniquely able to help our customers innovate and grow for the future,” said the American firm’s chief executive, Soren Schroder.

We are excited about the benefits that this combination will create for Bunge’s shareholders, as well as for the employees, customers and business partners of our companies.”

The deal follows soon after another high-profile American agribusiness move in Asia, when Archer Daniels Midland paid nearly US$95m to increase its shareholding in Singapore-based Wilmar to 24.9%.

Like Bunge, Wilmar is also keen to cash into the high growth potential of the regional market, where a rising middle class and growing income levels have spurred increasing demand for processed food. 

Under the terms of the Loders deal, Bunge will have the option to acquire the remaining 30% of stock in the business from OIO. 


More from Southeast Asia…

Industry leaders on edge after Duterte vows to abolish sugar promoter

Industry heads are resigned to the fate of their segment’s official promoter, which the Philippines president recently vowed to close in a bid to streamline government and curb corruption. 

They said they will respect whatever action is taken by Rodrigo Duterte on the Sugar Regulatory Administration (SRA), even though it's proposed abolition would have a massive effect on an industry reeling in the face of a proposed tax on sweetened drinks. 

Using a speech to outline plans to close the SRA, the Philippines leader hinted at the administration’s supposed nefarious practices and slammed its use of highly paid consultants. 

Temperatures lowered when agriculture secretary Emmanuel Piñol later clarified that Duterte had only been floating an idea about the SRA’s abolition.

In a statement, the Sugar Alliance of the Philippines said closing the authority would leave the industry reeling, so soon after the start of the milling season.

It said that more than 5m people directly and indirectly employed by the sugar industry would be affected if the SRA, which was established 21 years ago to promote the growth and development of the sugar industry through greater participation of the private sector and to improve the working conditions of labourers, were to close.

It also voiced hopes that the Duterte administration would see merit in allowing the industry development body to continue after it had “served and protected the interest of the industry from threats of sugar smuggling and challenges of globalisation for so long”.

We acknowledge that there are kinks we need to resolve, and that can and will happen with everyone's cooperation.

We will respect and abide by his decision,” the group added.

Yet some associations are not so sanguine. Enrique Rojas, president of National Federation of Sugarcane Planters, called on the president to reconsider his statement to close the SRA.

If the president is not satisfied with the performance of the immediate past administrator, it is not the fault of the entire agency,” Rojas said.

Meanwhile, Manuel Lamata, president of United Sugar Producers Federation of the Philippines, said the abolition of SRA would spell disaster for the sugar industry.

The president should fire the guilty, but not abolish the agency that has been doing its job,” Lamatta said.


Cargill buys unused feedmill in central Thailand

An unused feed mill in Thailand’s Prachinburi province has been acquired by Cargill to produce poultry and swine feed.

The mill, which opened in 1996 through a joint venture between Sri Thai Foods and Beverages and Thai-Denmark Swine Breeding, is expected to return to operations in May 2018.

It will employ some 50 employees and produce 72,000 tonnes of feed per year for distribution to eastern and northeastern Thailand. Cargill also has the option to expand the mill on the 10-hectare site, depending on market growth.

We are pleased Cargill has acquired the plant. We are confident it will be a prosperous business that will serve Thailand’s poultry and swine farmers well,” said Anan Jantaranukul, the feedmill’s managing director.

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