Privately-held agribusiness giant Continental Grain entered the sugar industry by buying half of Wholesome Sweeteners from Imperial Sugar, which became the second struggling US foods within hours to bolster its balance sheet.

Continental Grain paid $55,-60, Imperial's 50% stake in Wholesome Sweeteners, the largest organic sweeteners business in Canada and the US, of which the other half is owned by UK-based Edward Billington & Son.

The move takes into sugar a group better known for ownership of Wayne Farms, the US chicken group, and an 8.0% stake in US pork group Smithfield Foods, besides a range of crushing and grain interests in China and across South America.

Continental Grain - chaired by Paul Fribourg, who is also on the board at Estee Lauder and Burger King, and is a former director of media group Vivendi – bought its Wholesome Foods stake through its Arlon Group investment business, which also owns soup-maker Kettle Cuisine and restaurant group K-Mac Holdings, besides banking and pharmaceutical interests.

The move makes Continental the latest in a series of agribusiness conglomerates to extend into sugar, although many, such as Bunge and Noble, have expanded into South American production.

Fund raises

The deal represents a second disposal in three months for Imperial Sugar, which is attempting to beef up its balance sheet after a series of quarterly losses blamed on high raw sugar prices and teething troubles at its rebuilt Port Wentworth refinery, which was damaged by an explosion four years ago.

Imperial said it would book a gain of $35m-40m from the sale of Wholesome Sweeteners, which recorded sales of $117m in its latest financial year.

The sale came hours after loss-making US poultry giant Pilgrim's Pride revealed that it had completed a $200m rights issue to boost its own finances, a cash call which it said was 60% oversubscribed.

With holders of 94% of Pilgrim's Pride stock subscribing to rights issue shares, the result "signals confidence in the strategy we have implemented," Bill Lovette, the group's chief executive, said.

Market reaction

Subscribers included Brazilian meat giant JBS, which bought Pilgrim's Pride out of bankruptcy in late 2009, and used the rights issue to edge higher its stake in the poultry group to 68%, from 67.3%.

Pilgrim's Pride shares, which closed up 6.2% on Wednesday after its deal announcement, gained a further 1.7% to reach $6.47 on Thursday.

Imperial Sugar stock, which was announced overnight, added 3.5% to $5.70 on Thursday.

source: agrimoney

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