Thai Sugar Firm Mitr Phol Offers $4.45 per Share to Hike Stake in MSF
Thai firm Mitr Phol Sugar Corporation offered on Wednesday A$4.45 per share cash price for stocks of Australian sugar producer MSF to hike its stake in the company. Mitr Phol currently owns 22 per cent of MSF. The offers values MSF at A$313 million
The offer, dubbed by analysts as a sweet bid, is 31 per cent higher than MSF's closing price. With the higher offer, MSF shares went up 30 per cent to A$4.41 at close in Sydney. It is the highest in 35 years.
MSF operates four sugar mills and has a total crushing capacity of 4.7 million tonnes of cane. It produces 550,000 tonnes of raw sugar annually.
Mitr Phol is seeking more sugar assets in Australia to meet rising demand in Asia for the commodity. To do that, the Thai firm joined Bunge Limited, the world's second-largest sugar trader, and Singapore-based Wilmar International.
MSF Board Chairman James Jackson said the board would recommend Mitr Phol's offer in the absence of a better proposal and subject to an independent report from analysts if it is the A$4.45 offer is a fair and reasonable one.
"We wouldn't be surprised if a bidding war emerged for MSF, as we've seen with every other sugar assets.... We always expected that MSF would go at some point. Mitr Phol was the logical buyer, given that it paid A$4 a share a year ago for about 19.9 per cent," Bloomberg quoted Belinda Moore, analyst of Royal Bank of Scotland based in Brisbane.
Mitr Phol President Krisada Monthienvichinchai said Australia would be a new production site for the company which has existing sugar mills in Thailand, Laos and China.
"This helps us diversify risks and cope with the impacts of climate change. Each country has a different crushing season, so if one area has problems, the others can still run and produce sugar as usual," Mr Monthienvichinchai told Bangkok Post.