- Enterprise Valuation of A$1.75 billion delivers significant value to CSR shareholders
- Achieves strategic separation of CSR’s very different operating businesses
- CSR board considering capital management options
CSR Limited announced today that it has agreed to sell its Sugar and Renewable Energy business, Sucrogen, to Wilmar International Limited (“Wilmar”) for an enterprise value of A$1.75 billion (excluding minority interests).
CSR Chairman, Dr Ian Blackburne said: “the sale of Sucrogen to Wilmar achieves CSR’s objective of separating its two very different operating businesses.
“We have been working towards this objective for some time and having explored a number of strategic alternatives, the Board believes a sale to Wilmar is in the best interests of shareholders and stakeholders in CSR.”
CSR Managing Director, Jeremy Sutcliffe, said “the sale price of A$1.75 billion is an attractive valuation and will deliver significant value to CSR shareholders.
“Wilmar is one of the region’s largest listed agribusinesses, with a market capitalisation of approximately A$31 billion. The sale will enable Sucrogen to develop its globally cost competitive position in raw sugar milling, together with its market leading positions in refining and renewable energy, as part of a world-leading agribusiness group.”
“Following the sale, CSR can focus on growing its building products business, which already has significant leverage to the Australia/New Zealand residential and commercial construction industries, combined with a strategic investment in a globally cost competitive aluminium smelter.”
Terms of sale
The sale is subject to the following conditions:
- Foreign Investment Review Board approval;
- Overseas Investment Office (NZ) approval; and
- Other customary sale conditions.
The sale is expected to complete by (or before) the last quarter of 2010. The ultimate consideration paid will include an adjustment to reflect Sucrogen’s indebtedness to CSR at closing. A summary of the key terms of the Sale and Purchase Agreement is contained in Appendix A. At closing CSR will also enter into the usual separation agreements with Wilmar, including a Transition Services Agreement, to facilitate the orderly transfer of Sucrogen.
Capital management options
Net proceeds from the sale will depend on CSR’s capital gains tax liability from the sale, transaction costs and other sale adjustments, but are expected to be approximately A$1.6 billion.
CSR is evaluating a range of capital management options to utilise these proceeds efficiently. CSR will also review a variety of strategic opportunities over the coming months and capital management decisions will be made following this review. In evaluating these options, CSR continues to accept its responsibilities with respect to its asbestos liabilities and will maintain a responsible capital structure to support its future obligations.
Pursuant to the share sale agreement between CSR and Wilmar, CSR has agreed to defer implementation of its demerger of Sucrogen until 31 December 2010. If for any reason the sale cannot be completed, CSR may seek to proceed with a form of demerger.
CSR post sale
Post sale, CSR will be a focused building products company with a strategic investment in a globally cost competitive aluminium smelter.
CSR maintains a portfolio of Australia/New Zealand’s market-leading brands and extensive channels to market, supported by a strong manufacturing base which has been strengthened through the recent capital reinvestment programme.
The business will have a robust capital position, which is complemented by the strong cashflows generated by its investment in the Tomago aluminium smelter and sales from its property development portfolio.
In anticipating the potential separation, CSR has already appointed a strong management team, headed by Rob Sindel, CEO, CSR Building Products who has over 20 years’ experience in the building and construction industries through senior executive roles at Hanson and CSR.
Mr Sindel will be appointed Managing Director and join the board of CSR Ltd, replacing interim Managing Director, Mr Sutcliffe on or shortly after the completion of the sale of Sucrogen. Mr Sutcliffe will then revert to his former role as a nonexecutive director of CSR.
Until completion, Sucrogen will continue its operations in the ordinary course, subject to agreed arrangements with Wilmar. Wilmar does not anticipate any significant changes in the short term to Sucrogen's management and operations (including its milling and refining assets and its export contract with Queensland Sugar Limited). Post completion, Wilmar intends to work with Sucrogen’s existing management to enhance the Australian and New Zealand operations and to pursue Asian growth opportunities.
Wilmar, founded in 1991, is today Asia’s leading agribusiness group. It ranks amongst the largest listed companies by market capitalisation on the Singapore Exchange.
Its business activities include oil palm cultivation, edible oils refining, oilseeds crushing, consumer pack edible oils processing and merchandising, specialty fats, oleochemicals and biodiesel manufacturing, and grains processing and merchandising. Headquartered in Singapore, its operations are located in more than 20 countries across four continents, with a primary focus on Indonesia, Malaysia, China, India and Europe. Backed by a multi-national staff force of more than 80,000 people, over 300 processing plants and an extensive distribution network, its products are sold to more than 50 countries.