Sep. 20, 2017
Chinese state-run company Cofco has initiated a separation process for subsidiary Nidera Seeds to facilitate its sale. Sources in the seed market revealed that Cofco has been making global contacts, including with Syngenta, to seek alternatives for the sale of its seed units.
Swiss company Syngenta was purchased for US$43 billion by Chinese company ChemChina.
Nidera was founded in 1920 in Rotterdam and based in Argentina since 1929. Last year, Cofco got hold of 100% controlling stakes in the company. Besides this, it also started controlling cereal company Noble. Nidera and Noble became part of Cofco, a cereal giant, which sold over 47 million metric tons in the world and earned US$6.9 million as revenue in 2015. It is among the top 500 largest companies in the world.
The acquisition of Nidera was not done for its seed business, but because of the demand for grain trading and origination in China. This year, according to the USDA, the country will buy from the world some 94 million tons of soybean, above the 91 million metric tons purchased in the 2016-2017 season.
In the last 20 years, the Chinese soy consumption jumped almost seven times. In this context, the interest in buying Nidera is understandable. The firm was always among the top 10 cereal companies of the world. In the first seven months of 2017, Cofco Nidera was placed third in the ranking of grain exporters and byproducts, with 4.6 million metric tons, according to a report by the Zeni brokerage.
“They bought it because of the grain origination; the seeds were an addition, but it never interested them so much as to conserve the business,” a source told about the company.
“The seed company is moving separately from Cofco,” another source confirmed.
Ten days ago, Reuters agency reported that Cofco was considering the sale of its seed unit in Latin America, namely Brazil and Argentina.
In this regard, Kevin Yang, executive president and corporate issues manager at Cofco International, revealed that the firm did not have any interest in selling its Nidera operation, but made a few comments about the possible sale of the seed business.
“It is going to be a fusion or a sale,” a third source told La Nacion about Nidera Seeds.
The seed unit started to operate in 1988 and rapidly became a reference for the market. It was the first seed company to obtain approval to sell genetically modified organism (GMO) in the country. According to market sources, the company produces nearly 10 million bags of soybean in Brazil and Argentina combined, which is nearly six million metric tons in Brazil and four million metric tons in Argentina, where it has 33% of the market share.
According to sources, it produces 700,000 to 800,000 bags of corn in Argentina and 300,000 bags in Brazil. This position makes the business attractive to any company in the sector interested in expansion. Long before staying with Monsanto, there were rumors that Bayer made a consultation to buy Nidera’s seed business.