Man seeks Â£30m sugar exit
Sunday 25 May 2003
Man Group, the UK hedge fund company, is in discussions to sell its stake in its Australian sugar business for up to $50m (£30m).
The business is the last remnant of Man's old commodities trading business. Man demerged from ED&F, which trades in sugar and coffee, in 2000. The talks are being held with Sugar Australia's other two shareholders, CSR and Mackay, a sugar farming co-operative.
CSR is a large, profitable Australian sugar refining company. However Mackay, Queensland's largest private company, farms 20 per cent of Australia's sugar, a more difficult business.
Man owns 25 per cent of Sugar Australia, Mackay 25 per cent and CSR the other half. "Mackay have a vested interest in seeing that CSR don't get up to 75 per cent. It will be interesting when the bids are flushed out," said a source.
Last year Man's stake in Sugar Australia produced a £3.7m profit. Man is likely to play hard ball over the price, and could extract more money from Mackay.
"The problem is, Man wants a sensible price," said the source. "Because of their economic position, the bidders have not yet been able to offer a sensible price."
Sugar Australia has two refineries in Melbourne and Mackay, and last year produced over 680,000 tonnes of refined sugar,Australia's largest crop export after wheat.
Man's financial results have blossomed since its demerger, and last year its profits grew 53 per cent to £297m, as its hedge funds performed in a volatile stock market. It is now worth £3.7bn and is halfway up in the FTSE 100 index.
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