Wilmar International Ltd. (WIL), the world’s largest palm-oil processor, will gain joint control of India’s Shree Renuka Sugars Ltd. in an investment deal valued at about $200 million.
Wilmar will buy 5.2 billion rupees ($83 million) of new shares in India’s largest refiner at 20.08 rupees apiece, it said today in a statement. Wilmar and Shree Renuka’s controlling shareholders will then offer existing investors 21.89 rupees a share for as much as 26 percent of the expanded equity.
The investment adds to Wilmar’s sugar assets from Australia to New Zealand, Indonesia and Morocco. The transaction will allow the company, the largest cane miller in Australia, to expand in India, the world’s biggest sugar consumer.
“India is a very important market for Wilmar,” Chief Executive Officer Kuok Khoon Hong said in the statement. “This venture will complement the development of our edible oils and other businesses in India.”
Shree Renuka (SHRS) rose 3.5 percent to 22.40 rupees at the close of trade in Mumbai today. Wilmar, based and traded in Singapore, advanced 1.5 percent to S$3.36.
As part of the deal, Wilmar and Shree Renuka’s controlling shareholders will also invest as much as 7.3 billion rupees through a rights offer. The funds will be used to reduce Shree Renuka’s debt, according to the statement from Wilmar.
After the transactions, Wilmar will jointly control the company with Shree Renuka’s founders, it said.
Shree Renuka, based in Mumbai, had total debt of 84.8 billion rupees as of last March, according to data compiled by Bloomberg. That’s up from 8.4 billion rupees in 2008.
Shree Renuka has annual refining capacity of 1.7 million metric tons and milling capacity of 7.1 million tons in India. It also has land, milling capacity and ethanol production in Brazil.
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