Wilmar International Ltd. (WIL), the largest sugar cane miller in Australia, agreed to form a Myanmar venture with a local partner as it builds on a four-year push into sugar production in Asia.
The Singapore-based company will hold 55 percent in the venture with Great Wall Food Stuff Industry Co. after buying all of the local company’s sugar-manufacturing capacity, Wilmar said today in a statement. Wilmar will use its own funds for the investment and the venture will not have a “material impact” on this year’s earnings per share, the company said.
“Everybody’s been talking about Myanmar, so getting the foot in the door is probably worth doing,” said Carey Wong, an analyst at OCBC Investment Research Pte. in Singapore. “If you look at the spending power, it’s actually one of the biggest economies in Asia that’s left untapped.”
The investment comes less than two months after Wilmar announced plans to take joint control of India’s largest sugar refiner Shree Renuka Sugars (SHRS) Ltd. in a deal valued at about $200 million. The Singapore company, which is also the world’s top processor of palm oil, entered the sugar business in 2010 when it bought Australia’s Sucrogen Ltd. and then added assets in New Zealand, Indonesia and Morocco.
Great Wall and its associates own 2 mills with potential daily capacity of 4,000 metric tons of sugar cane and an annual production capacity of 65,000 tons of sugar, Wilmar said.
The joint venture will also take over Great Wall’s bio-ethanol plant and an organic compound fertilizer facility as part of the deal that requires approval from regulators including the Myanmar Investment Commission, the Singapore company said.
Wilmar didn’t specify the amount of the investment being made.
Sugar accounted for 7.5 percent of Wilmar’s pretax income last fiscal year ended Dec. 31, according to data compiled by Bloomberg.