* Deal values privately-run Nidera at about $4 billion -source
* Will give China access to S.American grain, oilseed supplies
* Purchase may also signal China’s goal to build a global trading firm (Recasts with COFCO confirmation, adds advisers)
By Naveen Thukral and Denny Thomas
SINGAPORE/HONG KONG, Feb 28 (Reuters) - China’s biggest grains trader COFCO Corp said it is buying a 51 percent stake in Dutch peer Nidera, in a deal that will give the world’s most populous country direct access to South American grain and oilseed supplies.
State-owned COFCO, whose announcement on Friday confirmed an earlier Reuters story, did not say how much the deal was worth, but a person with knowledge of the matter said the transaction would value Nidera at about $4 billion, including debt.
In addition to food security, COFCO’s first major overseas purchase of a trading house could signal China’s ambition to create a global trading company along the lines of Japanese, European and U.S. trading giants.
COFCO has already diversified into downstream activities such as milling, soybean crushing and pig breeding. In recent years, it has also expanded into branded foodstuffs, setting up an online platform to sell packaged foods to China’s food safety conscious consumers, and marketing high-end products like its Great Wall wine brand, chocolate and edible oils.
It is the largest shareholder of China’s major dairy firm Mengniu and has a growing property portfolio that includes shopping malls and hotels.
The Nidera purchase would help the Chinese company to increase its reach as the Dutch firm is a producer and trader of agricultural commodities with operations in more than 20 countries, including in South America.
COFCO president Yu Xubo said in a statement Nidera has strong grain purchasing capabilities in Brazil, Argentina and central Europe and a global trading network, which can “extend COFCO’s global trading network and offer new opportunities for expansion”.
Nidera’s product sales exceed 33 million tonnes, including grains, oilseeds, vegetable oils, oilseed meals, agricultural inputs, bio-energy products as well as forward freight engagements. The COFCO statement said Nidera has annual sales of more than $17 billion.
China’s goal in the majority stake purchase could be more wide-ranging than just food security, some analysts said.
“China really doesn’t have a global agricultural commodity house champion like some of the other countries do,” said Paul Deane, agricultural commodity strategist at ANZ in Melbourne.
Chinese companies will have to be aggressive as a wave of consolidation in the world agribusiness sector has shrunk the number of potential acquisitions that could allow COFCO to compete globally with large agribusinesses known as the ABCDs.
The ABCDs are ADM, Bunge Ltd, Cargill Inc and Louis Dreyfus Corp.
“If you really want to build a global trading company you have to buy one of the major players,” said Deane. “The consolidation has largely taken place.”
Glencore bought Viterra Inc, Canada’s largest grain handler, for $6 billion in 2012 and Japanese trading house Marubeni Corp agreed to pay $5.6 billion for U.S. grain merchant Gavilon last year.
More recently, Japan’s Sumitomo Corp acquired full ownership of Australian bulk grain handler Emerald Grain and Singapore’s Wilmar International agreed to invest for a major stake in India’s Shree Renuka Sugars.
Australia in November rejected a $2.5 billion takeover of GrainCorp by U.S. agribusiness giant Archer Daniels Midland, bowing to pressure from grain growers in a rare and surprising decision.
Last year, China’s Shuanghui International Holdings bought U.S. pork producer Smithfield Foods Inc, in the largest ever acquisition of a U.S. company by a Chinese firm.
China is looking for new sources of food supplies to feed a growing demand for high-protein products fuelled by rising incomes. China’s meat demand is climbing fast and it needs feed grains such as soybean meal and corn to fatten animals.
China, which accounts for 60 percent of soybeans traded across the world, is emerging as a leading importer of corn.
The country’s corn shipments are likely to nearly double to 5 million tonnes in 2013/14 from a year ago, according to the U.S. Department of Agriculture.
It is also expected to become the world’s top wheat buyer in the year to June 2014 after adverse weather damaged the domestic crop last year.
HSBC Holdings is advising COFCO, while ABN AMRO is the financial adviser to Nidera, the person with knowledge of the matter added. The source declined to be identified as the financial details of the transaction were not made public. (Additional reporting by Christine Stebbins in Chicago, Sara Webb in Amsterdam and Dominique Patton in Beijing; Editing by Michael Flaherty, Himani Sarkar and Muralikumar Anantharaman)