COFCO to tie up with Noble Group to form joint venture

COFCO to tie up with Noble Group to form joint ventureChina's COFCO Corp has entered into a definitive agreement with Noble Group Limited to form a new joint venture in the agricultural services industry.

COFCO Corp is a leading  supplier of products and services in the agricultural products and food industry in China while Hong Kong's Noble Group Limited is a  global supply chain manager of agricultural and energy products, metals and minerals. The tow companies have entered into an agreement to form Noble Agri Limited joint venture.

COFCO will acquire a 51 percent stake in Noble Agri from Noble Group in a cash deal for acquiring the joint venture. COFCO have own 51 per cent of the new firm while Noble will own the remaining 49 per cent stake in the joint venture. The deal valued Noble Agri at 1.15 times 2014 book value. Noble Agri had shareholders' equity of $2.8 billion and net debt of $2.5 billion as on 31 December, 2013.

Noble Agri is expected to become the key international origination platform for COFCO. Following the formation of the joint venture, the company's ream origination and trading operations will be linked to the downstream processing and distribution capabilities.

Noble shares rose 4.2 percent to S$1.25 in Singapore trading this morning, which is its highest since 28 January. JPMorgan & Chase Co. is sole financial adviser for Noble.