BRIGHT FOOD SIGNALS INTEREST IN CSR

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Shanghai's Bright Food Group said it had approached Australia's CSR to acquire its sugar and renewable energy unit, which is Australia's biggest raw sugar producer, for up to A$1.5bn (US$1.4bn) in cash.

CSR, which plans to split in two by demerging its sugar and renewable energy unit from its building products operations, dismissed the approach, saying Bright Food had not made an offer but simply requested talks to develop a bid proposal.

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Chinese interest in Australian companies has focused on resources, but Chinese groups are widening the business sectors they are targeting. However, a bid would attract regulatory scrutiny, given CSR's dominant market position.

Several deals have been blocked by Australia's foreign investment regulator, while Chinalco's proposed US$19.5bn investment in Rio Tinto collapsed last year when the London-based mining group walked away from the transaction.

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Bright Dairy, a subsidiary of Bright Food, was one of 22 Chinese companies found in 2008 to have sold milk products containing melamine, an industrial chemical used to boost protein levels in milk.

Bright's involvement in the Chinese melamine scandal, in which at least six infants died and 300,000 fell ill, could also raise questions in Australia.

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Bright Food, a producer, distributor and retailer with links to a range of companies including Pepsi, Nestlé, Coca-Cola, Danone and Suntory, approached CSR last year after the Australian group announced demerger plans. Yet, no formal proposal was made.

CSR has commanded up to 60 per cent of Australia's raw sugar production market and is in the top 10 producers globally.

The Chinese group, which stressed it had not made a formal offer but a proposal to engage in talks, said that based on current information, it valued the CSR unit at no more than A$1.5bn.

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Bright Food forecast significant growth in China's sugar demand as its population rose and became wealthier, adding it could leverage its distribution network, which it said was the largest in China, to distribute CSR sugar products.

CSR said Bright Food's statement was “merely an expression of interest” and failed to make any proposal capable of acceptance.