TWO of the biggest and most established sugar mills in north Queensland are set to pass into foreign ownership.
Proserpine was sold yesterday to a Singapore company and Tully looks as though it will be sold to Chinese interests.
Both mills have been owned by growers since they were established and the ownership change represents one of the biggest shake-ups in the sugar industry since it was deregulated in 2006.
Sugar mills are highly capital-intensive, and grower-owned mills have been stretched financially in the past year as cyclones have battered north Queensland and the sugar crop.
In these circumstances, large international companies have the capacity to gain synergies by combining sugar mills in a way that smaller individual mills cannot.
The Chinese government-owned China Oil & Food company increased its takeover bid for Tully Sugar yesterday to $44 a share, valuing the mill at $136 million, and the Tully Sugar board recommended it be accepted.
But the recommendation was made “in the absence of a superior proposal”, leaving the way open for either US agribusiness Bunge or French-backed Mackay Sugar to increase their offers.
But the endorsement is still significant, as previously the board has recommended to its shareholders that no action be taken. Continue reading