Associated British Foods (ABF) said on Monday it has agreed to sell its cane sugar business in southern China to a consortium led by Shenzhen-listed Nanning Sugar Industry Co Ltd.
ABF did not disclose the value of the deal but two people with direct knowledge of the matter said the transaction value, including debt, was about $500 million.
One of the people said that two domestic private equity funds, Minsheng Royal Capital Investment and Guangxi Royal Construction Investment had teamed up with Nanning to buy the business.
The people declined to be identified as details of the deal were not made public by the companies. ABF declined to comment while Nanning was not available for immediate comment.
Shares in Nanning, which has a market value of $1.1 billion, were suspended from trade on Monday afternoon.
ABF’s southern China business comprises five cane sugar factories with an annual production capacity of some 600,000 tonnes of sugar, which are held through controlling interests in four joint ventures.
The sale also attracted bids from some Chinese state-owned enterprises, one person said.
Following the sale, AB Sugar will have operations in Britain, Spain, southern Africa and northern China with an annual processing capacity of some 4.4 million tonnes of sugar and 600 million litres of ethanol. ABF will have about 4,500 staff in China.
While sugar prices have risen sharply this year, a long downturn in prices prior to that has forced many global producers, including ABF, to focus on profitable markets.
ABF entered the Chinese sugar market in 1995 with the acquisition of its first cane sugar factory through its Bo Qing joint venture in Guangxi province.