Wilmar to buy stake in India's Shree Renuka
By Sumeet Chatterjee
MUMBAI Feb 20 (Reuters) - Singapore's Wilmar International has agreed to invest up to $145 million for a stake in India's Shree Renuka Sugars, giving it a foothold in the world's biggest sugar- consuming market.
The transaction, which will be completed in two steps, will see Wilmar - the world's top palm oil processor with business interests in sugar, laurics and other commodities - and the Indian company's founders owning equal stakes in Shree Renuka.
India is the world's second-biggest sugar producer after Brazil, where Shree Renuka has a division. Analysts said the Indian company will be able to explore new export markets after the tie-up with Wilmar.
"India has been producing surplus sugar for the past four years," said Mukesh Kuvadia, secretary of the Bombay Sugar Merchant Association. "The deal will help Shree Renuka Sugar access global markets more easily."
Wilmar said it was important for the company to establish its presence in Brazil and India, in addition to the company's existing operations in Australia, New Zealand, Indonesia and Morocco.
India usually produces white sugar, but its ample supplies have depressed local prices below the cost of production. The government wants mills to produce raw sugar, which can be sold in the world market easily compared with white sugar.
In the first part of the deal, Wilmar will buy 27.5 percent of Shree Renuka for $83 million through a preferential allotment of shares.
It will be followed by a mandatory tender offer to buy up to 26 percent from Shree Renuka's public shareholders by Wilmar and the founders of the Indian company that will raise up to $86 million if the offer is full subscribed. Continuación...