China National Cereals, Oils and Foodstuffs Corp, known as COFCO and the country's largest food trader, has agreed to purchase 51 percent of Rotterdam-based grain trader Nidera BV for an undisclosed sum to further expand China's grain supply channel in South America.

Nidera, with an annual turnover of more than $17 billion, is a major player in South America's agribusiness and crop technology sectors. It has built a global presence in more than 20 countries, including Brazil, Argentina, Uruguay, the United Kingdom and Italy. It employs 3,800 people globally in agricultural, commercial and industrial operations.

The proposed transaction will provide Nidera with great potential for growth in the China market and also strengthen COFCO's position as a key player in the global agricultural industry through access to Nidera's global origination, trading network and its fast-growing seed business.

Nidera has a strong origination platform in Brazil, Argentina and Central Europe as well as a global trading network, which can further extend COFCO's global presence and create new opportunities, Yu said.

COFCO didn't disclose the transaction cost.

"COFCO is fully committed to supporting Nidera's development through its competitive edge in trading, processing, branding and distribution," Yu said.

With difficulties concerning land, water resources and temperature conditions, it is hard for China to meet the growing demand for certain agricultural products.

Holding a stake in the Dutch company will help COFCO gain direct access to buy oilseed, corn, soybeans and edible oils in South America and further ensure the grain security of the world's most populous country.

"This deal will generate great growth opportunities. The Chinese and Asian markets are of great importance to Nidera," said Ton van der Laan, chief executive officer of the Dutch company.

"We were looking for a strong partner to jointly invest in future growth. Strategic partnership with COFCO is an ideal choice for Nidera and will benefit both sides."

Ning Gaoning, chairman of COFCO, said investing in Nidera is "in line with COFCO's strategy to become a global player in the agricultural industry with a fully integrated value chain. It represents a significant step toward COFCO's global expansion".

Both parties will work together to obtain regulatory approvals and they will make joint plans for post-closing integration.

Under the agreement, the existing shareholders of Nidera will all retain equity stakes in the company. The current leadership and management of Nidera will stay to secure a smooth integration and successful partnership.

"Because of limits on land purchases in countries such as Brazil and Zambia, which have ownership restrictions for foreign companies, COFCO has been focusing on non-grain investment abroad in recent years," said Ding Lixin, a researcher at the Chinese Academy of Agricultural Sciences in Beijing.

"This is COFCO's largest stake purchase over the past five years," Ding said.

COFCO took control of Australian sugar producer Tully Sugar Ltd in 2011, but it lost a bid for Proserpine Cooperative Sugar Milling Association, another Australian company, in the same year. In the wine sector, the company bought Chateau Viaud in Bordeaux, France, in 2011 after a previous purchase in Chile.

To seek more market growth points, the Chinese company has also diversified its business scope into the fields of pig breeding, soybean crushing, edible oil and confectioneries.

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