DISTRIBUTOR and marketer Queensland Sugar has decided to sell its 19.9 per cent stake in Tully Sugar to takeover contender Mackay Sugar for $43 a share, sparking a fresh bidding war from two other interested parties, US giant Bunge and China’s state-owned Cofco.
The news came as Cofco announced the Foreign Investment Review Board had approved its deal to buy a 19.9 per cent stake in Tully and its decision to increase the holding.
On Friday, Mackay upgraded its offer for Tully by $2 to $43 a share (the same price offered by Bunge and Cofco), valuing Tully at $132.9 million.
The combined Queensland Sugar/Mackay holding in Tully now totals almost 30 per cent.
Cofco has a precommitment for a 19.9 per cent stake and Bunge has a small stake.
Mackay’s bid is backed by French-based commodity trader Louis Dreyfus, which has agreed to provide debt funding of up to $102m.
Tully is one of the last independent, grower-owned sugar mills in Australia and also owns residential properties in far north Queensland and other assets.
Mackay is the country’s second-biggest sugar milling company, owning three mills and a refinery in Queensland.
Queensland Sugar operates a collective marketing and distribution system for the industry, which exports sugar worth about $1.4 billion a year, making it the third-largest sugar exporter in the world after Brazil and Thailand.
Queensland Sugar chief executive Neil Taylor said: “The industry is changing . . . there is consolidation going on. It’s absolutely in no way Queensland Sugar’s self-interest. Our long-term future will hopefully be determined by doing a good job for all the future stakeholders of the industry, some of whom are only just emerging.”
Mackay Sugar chairman Andrew Cappello told Tully shareholders last week that by accepting Mackay’s offer “you are ensuring Tully Sugar’s business remains in Australian hands”.
Cofco said FIRB’s approval now made its offer for Tully unconditional. Cofco said it maintained its previous commitments towards canegrowers and the community.