CANBERRA (MarketWatch) — Mackay Sugar Ltd. late Thursday formally lodged its A$41 a share bid takeover bid for Tully Sugar Ltd., even though U.S.-based agribusiness giant Bunge Ltd. BG +1.29% and China’s state-owned Cofco Corp. have already revised their bids higher to A$43 a share valuing Tully at A$132.9 million.
Mackay’s bid is backed by French-based commodity trader Louis Dreyfus, which has agreed to provide debt funding of up to A$102 million to help fund the offer. Mackay is Australia’s second largest sugar milling company, operating three mills, a refinery, and producing molasses and electricity on the Queensland central coast south of Tully.
At stake is the ownership of one of the last independent grower-owned sugar mills in Australia and other assets including residential properties in the Far North Queensland town. The Tully mill, whose operation is highly regarded in the industry, has a crushing capacity of 2.5 million metric tons of cane a year and produced 315,000 tons of raw sugar in 2002, before production started falling as a result of a series of poor crop seasons.
“By accepting Mackay Sugar’s offer, you are ensuring Tully Sugar’s business remains in Australian hands, managed by a professional grower-controlled company” that has a proven track record of working with growers to deliver higher prices and a more secure and diversified business while investing in the industry, Mackay Chairman Andrew Cappello said in the offer document.
At present, more than 60% of Queensland’s sugar milling assets are under foreign ownership, which means wealth generated by local growers goes overseas, he said