British food and retail group Associated British Foods PLC is considering a sale of its sugar business in China that could bring in $ 1 billion, according to people familiar with the matter.
The company is tendering for the Chinese operations of its AB Sugar unit, which was established in 1995 through a joint venture and now has factories and factories in southern and northern China, said one. people.
The potential sale could attract Chinese buyers, who are looking to invest more in agricultural commodities, according to people familiar with the situation. The offers are expected by the end of May, they said.
Sugar consumption in China is slowing amid weak overall economic growth, and production costs have risen with wage increases.
ABF, which is China’s sixth-largest sugar producer in terms of capacity, cut operations in China last year. The UK company sold two of its factories in northern China’s Heilongjiang Province in 2015. It took on a non-cash charge of £ 100million ($ 144million) when it ceased operations in Province.
In April, the company reported that its business in China was improving after factories closed and prices rose.
The operational performance of two beet sugar factories, in Zhangbei and Qianqi, was strong with 159,000 tonnes of sugar produced. In the South, production was 31% lower than last year at 287,000 tonnes, due to the combination of a smaller area under cane cultivation, excessive rains affecting the maturity of the cane. cane and the resulting low sugar content.
Chinese companies have expanded in the agricultural industry at home and abroad in recent months. The Sinochem Group, China’s largest seed and fertilizer seller, made an offer in March to buy Singapore’s natural rubber supply chain manager Halcyon Agri Corp. and combine it with other units to create the world’s largest publicly traded rubber company.
In December, state-backed grain trader Cofco agreed to buy Noble Group’s remaining stake in its Noble Agri joint venture for $ 750 million.
ABF currently operates five cane sugar factories in southern China’s Guangxi province and two beet sugar factories in the northeast of the country with an annual sugar capacity of over 800,000 metric tonnes, according to the website. Internet of society.
ABF was one of the first Western companies to invest in China when a subsidiary invested in the country’s yeast production in 1985.
It has established over 50 legal entities in China with a total investment of over 6 billion yuan ($ 922 million) and employs over 10,000 people, with business interests in other sectors such as agriculture, individual ingredients and nutritional foods.
Lucy Craymer and Ed Ballard contributed to this article.