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BRAZILIAN grain company Fiagril Participaes SA sold a controlling stake to Shenzhen-listed Hunan Dakang Pasture Farming Co., a unit of Shanghai Pengxin Group Co., the Brazilian company said Friday.
Two sources with direct knowledge of the deal said the Chinese firm bought a 57 percent stake in family-owned Fiagril, the latest move by Chinese agricultural merchants seeking to secure future supply of food in Brazil.
The first source said the value of the deal could be around 1 billion reais (US$290 million). The second source said that current management will be kept in place.
Fiagril released a statement but it gave few details.
Under terms of the deal, Shanghai Pengxin will provide fresh financing to Fiagril through working capital loans, the first source said.
Fiagril chairman Marino Franz said in the statement the company will be able to grow after the agreement. Fiagril, which has grains trading and processing operations, is based in Lucas do Rio Verde in Mato Grosso state, in the heart of Brazil’s center-west grain belt.
Fiagril negotiates the purchase of soybeans and corn directly with farmers, to whom the company also supplies fertilizers and pesticides.
The deal will exclude Fiagril’s shipping, biofuels and seed production businesses.
The Fiagril acquisition marks a further step in recent efforts by Chinese merchants to get a grip on Brazil’s thriving grains production and export market.
Flush with cash, Chinese firms, including China National Cereals, Oils and Foodstuffs Corp. (Cofco), are aggressively wrestling market share from their larger Western rivals.
Recent transactions include Cofco’s purchase of controlling stakes in Dutch trader Nidera Holdings and Noble Group’s agribusiness unit, which gave the Chinese firm access to sugar mills and grain production platforms in Brazil and Argentina.
The Pengxin-Fiagril transaction comes as Brazil, the world’s largest soybean exporter, is in the midst of a record harvest. That follows a record corn export season. (SD-Agencies)
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