Noble to sell 51% of agribusiness to Cofco

AFTER months of intense market speculation and a spin-off listing that did not materialise, Noble Group has finally agreed to sell a majority stake in its agricultural business to China's largest grain trader, Cofco Corp, in an all cash transaction that values the unit at US$3.22 billion.

The deal, widely seen as a move by Cofco to secure China's food security overseas, could improve Noble's balance sheet and help cut its earnings volatility as its agribusiness has been underperforming due to overcapacity in Chinese soybean crushing and sugar milling in Brazil.

"This reduces the impact of what has been the worst performing/biggest earnings volatility for Noble," said Adrian Foulger, head of soft commodities research at Standard Chartered in Singapore.